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Should We Tax the Rich More? The Pros and Cons

Paul studied philosophy at the University of Leicester, UK, and has done a variety of jobs since, including advocate, librarian, and writer.

Tax the Rich? Pros and Cons

Tax the Rich? Pros and Cons

Should We Increase Taxes for the Wealthy?

Should we tax the rich more? In the US and across the world, there is an ongoing discussion about how much tax the wealthy should pay. People debate whether or not taxes should be increased for the richest 1%.

As economic problems have intensified in recent years, so has the debate. The people on the left of politics generally want higher taxes for the wealthy, insisting that those richest 1% can easily afford to make a larger contribution. Whereas people on the political right generally argue that increasing taxes for higher-earners is counterproductive and may actually worsen inequality rather than solve it.

Below, I have laid out the main pros and cons of the argument: Should we tax the rich more? Read on.

7 Reasons Why We SHOULD Tax the Rich More

  1. When economic times are tough, the government needs to look for ways to bring in more money. Increasing taxes on the wealthy makes sense, as they are the ones who are most able to afford tax increases. The people who have benefitted the most from the economy should support programs that help the poorest.
  2. A progressive tax system can prevent wealth discrepancies from getting too large. When the gap between rich and poor gets beyond a certain point, there is an increased risk of social instability and strife, such as crime and political turmoil. Vast differences in wealth are also seen by many economists as one of the factors that led to the Wall Street Crash in 1929.
  3. Taxing the rich can also be justified on moral grounds, if it is used as a form of wealth redistribution, with the tax money raised being used to aid the poorest sections of the population.
  4. Because income from wealth is taxed less than income from work, wealthy taxpayers use many generous tax benefits (like delayed or defrayed taxes on inheritance or capital gains) to drastically lower their taxes. Expanding the types of incomes considered "taxable" would help offset this imbalance, and adjusting these preferences would make the tax code more progressive.
  5. There is evidence to show that economic growth can occur despite a raise in taxes. Countries such as Australia, Sweden, and Canada all do well in terms of economic growth despite requiring high taxes.
  6. Since the 1970s, the incomes of the wealthiest members of society has increased dramatically, while the income levels for the rest of society have barely changed in real terms. Since the 1980s, those at the very top have seen the fastest growth in income. This means that adjustments need to be made.
  7. Money is needed to pay for defense, health, education, social security, etc., and it has to come from somewhere.

A Wealth Tax for the Ultra Rich?

Why is it that if you take advantage of a corporate tax break, you're a smart businessman, but if you take advantage of something so you don't go hungry, you're a moocher?

— Jon Stewart

6 Reasons Why the Rich SHOULD NOT Pay More Tax

  1. Governments already waste much of the money that they collect. If taxes are increased, all that will happen is that the government will just have more money to waste and there will still be no incentive for them to spend efficiently.
  2. The raising of taxes acts as a disincentive for individuals and businesses to make money. Some of the most talented people and businesses will leave the country and find somewhere with lower taxes if they feel that their efforts are not being sufficiently rewarded.
  3. People argue that raised taxes have slowed the economy and led to market stagnation.
  4. There are numerous examples of how cutting taxes for businesses actually increases overall revenue. Increasing taxes, on the other hand, just makes businesses alter their investment, spending, and tax behaviors in order to find ways of cutting their tax expenditure, which generally leads to an overall decrease in revenue for the government.
  5. Higher taxes inevitably lead to a reduction in investment, as the people most likely to invest have their money supply hit. If there is less investment, then there are fewer businesses, and unemployment increases. With more people out of work, there is less money being spent, and the economy goes into a downward spiral.
  6. Increasing taxes for the wealthiest segment of society is socially divisive and encourages a class war situation where the poor and middle class begin to resent the rich, and the rich, who find themselves paying an increasing share of the tax bill, resent the poor and the middle class in return.

12 Myths About Taxing the Rich

We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. And then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again.

— Marco Rubio

A Brief History of Taxes in the US

  • 1760s: The American Revolution is kickstarted by a rebellion against the British taxation policy.
  • 1770s: The newly independent US collects taxes on imports ("tariffs"), whiskey, and (for a time) glass windows.
  • 1800s: States and localities introduce a poll tax (which applies to voters) and a tax on property.
  • 1900s: State and federal inheritance taxes start after 1900.
  • 1930s: States impose sales taxes in the 1930s.
  • 1913: Income taxes are imposed temporarily during the Civil War, but it is not until 1913 that they are brought in on an indefinite basis.

What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.

— Mark Twain

IRS building in Washington D.C. People against tax rises for the rich argue that government departments already waste much of the tax revenue raised.  Increasing taxes would just create more waste and disincentivize investment.

IRS building in Washington D.C. People against tax rises for the rich argue that government departments already waste much of the tax revenue raised. Increasing taxes would just create more waste and disincentivize investment.

We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

— Winston Churchill

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

Questions & Answers

Question: Can higher taxes contribute to a fairer society?

Answer: Proponents argue that progressive taxes are an effective method for redistributing wealth and creating a fairer society through reducing financial disparities. Opponents argue that higher taxes unfairly penalize earners, act as a disincentive, and reduce the amount of money that businesses can reinvest.

© 2011 Paul Goodman

Comments

Glen Rix from UK on June 12, 2020:

Oxfam calculated in 2016 that the 62 richest people in the world have combined wealth that is more than the combined wealth of half the world population. That is unjustifiable, imo. It will be interesting to see how governments recoup the vast cost of supporting the workforce through the coronavirus. I believe that the wealth of the super-rich should be taxed, starting with money squirrelled away in off-shore tax havens.

David Zersen on November 18, 2019:

I've never understood why those who advocate universal health care/single payer health care/medicare for all or free higher education don't explain that when everyone pays higher taxes everyone can also receive greater benefts. And greater benefits can reduce the necessity of paying the unfair overhead levied in our laissez faire system. Many economic systems provide examples for the U.S. to explore, but the lunatic fringe brands them communist, godless and unworkable. The Democratic debate scheme that just allows sound bites from 20 candidates provides no opportunity seriously to explore working systems that don't pander to voters by encouraging them to choose the candidate who will only tax the rich. What we need is a candidate who explains how higher taxes are an advantage when all pay for what currently only some are paying double to receive.

Brad Master on July 27, 2019:

In the US to tax the rich at all, we would have to removed the Internal Revenue Code.

SortingHat on July 27, 2019:

My Dad was self employed in the state of Oregon earning 40 to 50 thousand a year and had to pay 40 percent taxes the last time they taxed the rich. Thanks a lot. To this day we are still struggling from it.

Kyle on July 27, 2019:

We have a sick and dying middle class since industry left this country. Since the 70s our companies competed against slave labor in China and lost. Our government capitulated and allowed industry to move to cheap labor in China. They took the jobs,the factories,skills,the machinery unbolted from the factory floors to China. We were left with a service economy,electronics,banking and Hollywood. All of which are faltering. We have no manufacturing basis to sustain the service economy. We have no skilled middle class workers. Our military gets everything from China down to the boots.

China under Bush put our military satellites into space because our rockets failed. (Don't know what happened to rockets under Obama's Watch but he said the "Purpose of NASA was to get more Muslims involved in science.") Under Obama capital fled this country to such a degree Congress passed a law limiting the amount of cash you can take out of the country. Most of it has not come back. Many Rich people fled with all their investments with them some RENOUNCED their US Citizen ships all the way. Meaning they will not be coming back ever.

Without a middle class taxes do not work.

Md taj on May 23, 2019:

Should the richest man tax more

Topic in English plz help me

Antone Larimer on April 23, 2019:

go for it is smart

bradmasteroccal on April 13, 2019:

In the US, imo, the unequal distribution of wealth is due to the Internal Revenue Code. This code can only be used by the rich to reduce, defer, or even eliminate a tax. The bulk of rich people don't make money from wages, they make money from the stock market and stocks which has been a flat 20% for ever.

People making wages can only use a few from the code, but most of the important ones like credit card interest were removed by the 1986 Tax Reform Act.

Taxing the rich more with progressive marginal tax rates doesn't really do anything because of the Internal Revenue Code. There are so many tax loopholes in it, but you need to have lots of money to use it. Bill Gates for example more than doubled his total wealth after the great recession of 2008. While millions lost everything, their jobs, their homes, and their livelihood.

I submit that a National Sales Tax like most of the states already have should totally replace the Income Tax. Just because Income Tax is an amendment doesn't mean we are forced to use it. The sales tax would have the same percentage say 10 to 12% and everyone pays it. The more tax on the rich comes by what the cost is for their purchase. That means everyone pays the same and there are no loopholes.

This is not a flat tax because that still uses income to tax.

Kirk on April 13, 2019:

Redistribution of wealth is a lie. Taxing anyone with the intent of "redistributing" is has never ever been done. Those monies from taxes never end up in the pockets of the poor. True, sometimes it's put into social services, but at the end of the day, the poor don't have a single dime more to their name. So they have no increase in wealth so therefore it's not wealth redistribution. Let's stop being dishonest and stop using that term. It's a warm fuzzy term that makes you feel good, but is so far from reality to be laughable.

Alpha Hunter on February 19, 2019:

As a 16 year old young man, even i start to understand that some big companies *cough google and amazon cough* aren't paying enough tax to keep 'the working class' out of poverty and living happily. without these taxes from these companies, wages cant increases in time with the prices of rent or mortgages, meaning most will be in debt most of there lives, trying to live. we are paying to live. and it's utter shit.

John Hall on February 09, 2019:

Taxation is theft

Jean on December 13, 2018:

Tax them at the same rate that every one else pays and kill the "loopholes" that allow them to legally hide their assets. Oh, (going off on a tangent) do not allow them to run from the wars that they love to start all over the world!

MiddleClassGND on October 16, 2018:

Most people don't think of Doctor's or anyone like that as "rich" ... they are talking about multi-billion dollar corporations that evade paying even their share of taxes...much less more.

Artuer on October 10, 2018:

Cons points 2-5 have been debunked by Economic theory and practice for eons. 1. It is much cheaper to create healthy people and opportunity for them to be self-sufficient as it reduces overall Federal, State and Local government costs. The savings on fighting crime and drug abuse alone would make up for much of the expense. 2. Resources are limited and we live in a global world where we are all connected, it is morally irresponsible to hoard resources. Take what you need and leave some for others would go a long way to healing our culture of hate.

Pyton on April 30, 2018:

Also, I want to add the world isn't fair get over it and grow up! A man that spends 8 years of his life to be a doctor should be awarded with alot of money because he earned it? So you think someone working at taco bell that just smokes weed all day after work should get paid the same as a doctor? That doesn't make any logical sense. There has to be an incentive to study years of your life away and that incentive is money. What's actually is not fair is people wanting to take away from that man that busted his ass off and sacrificed alot of time of his life that he will never get back. Again, I say get off your ass and get to work so you can make something of yourself.

Bailey on April 30, 2018:

Well I am 26 and just finished college 2 years ago with a degree in software engineering. I didn't go to college immediately and found myself working 50 hours a week to pay everything and was miserable. I look back at all my struggles and think about the incentive to keep going to better myself. People shouldnt be punished for working harder than others. People want to rob from the wealthy and give to the poor. "All for one and one for all" that is communism! If there isnt an incentive to work hard, why would anyone bother? Great example of this not working is venezuela, cuba, and Russia. I make 110k a year now and I worked hard. I'm in a very high tax bracket now and it shouldn't be raised. The problem with my generation is they want everything given to them as if they are a child. My advice to everyone my age and younger is GET OFF YOUR ASS AND WORK FOR SOMETHING!

S.A on April 07, 2018:

Great post! I think the rich should not have to pay more and this is coming from a lower middle class person. I plan on having a nice career when I get older and this definitely deters me away from it. Also, I get why people say they should but those people don’t think about the fact how those doctors, businessmen, whoever have worked their butts off to get where they’re at. They spent time studying their way through college to get to where they’re at. If liberals are all about fairness then where is the fairness in that. I’m sorry people, but that’s not how life works. You don’t just get handed things to you. Every single person on this planet has made a sacrifice. If you don’t like where you’re at today, take a look at yourself, the materialistic things you have, the decisions you’ve made in your life and your attitude. I truly believe that anyone can be capable of changing their lives dramatically. However, it’s not going to be handed to you and you might have to work a little harder for it but it just depends on how much you really want it.

Vickie Hicks on January 24, 2018:

I think the rich should have to pay more taxes then anyone else in the country because they make(Have) more money then the little guy who has to work two or more jobs just make ends meet. If the rich have to work at minimum wage just like everyone else and not their millions then they see what is like to have to worry about paying their bills to just like anyone making $7.25 an hour just to get by.

anonymous on December 21, 2017:

There are NO cons to taxing the wealthy.

The Corporations and the Wealthy were taxed a lot more "during the first three decades after World War II, when the American economy grew faster than it’s been growing since the Reagan tax cuts."

Brad on December 19, 2017:

In 1916, John D. Rockefeller was credited as the first person in the United States to become a billionaire, according to The Motley Fool.

In 1987 Bill Gates got his first billion. And today he has 90 billion.

The point is that it is the Income Tax system that allows the rich to get richer. As long as we have the Income Tax System with its Internal Revenue Code IRC the rich have ways to get out of taxes.

None of the presidents nor any 0f the congresses of either party have slowed down these billionaires. Today there are 540 US Billionaires and 1810 in the world.

There are 10.8 million millionaires in the US today.

So the last 8 years under a democrat president, and a democrat congress they never instituted any tax plan that retarded the milli0naires or billionaires.

So the democrats balking about the GOP tax plan didn't do any better themselves in the last 8 years.

In 1986, president Ronald Reagan created the Tax Reform Act. It was supposed to reduce taxes for the working employee. But the caveat was that it also came with those employees losing most of their useful deductions. Yes the taxes went down, but in a few years the taxes went back up. The deductions that were lost never came back.

BTW, during the Obama term in 2013, congress moved the medical tax deduction threshold from 7.5 percent to 10 percent. That was a major loss of tax deduction for the elderly. And if the ACA was so good for the people, then why did congress raise the medical threshold. That increase would make sense if the government thought that medical expenses outside of insurance would rise.

If you want an equitable tax program then think about a National Sales Tax. One that would totally replace the Income Tax. A Flat Tax would still have the Internal Revenue Code.

The National Sales Tax would be like those already in most states.

This NST could be between 10 and 15 percent. It wouldn't include the FICA Tax because that is a payroll TAX.

My point is that neither party is interested in giving the middle class a tax break, and the poor either don't pay taxes or not much of it.

When a rich person buys an 250,000 car or other such purchase. They pay 25,000 dollars in taxes period. NO deductions, exclusion, or deferments.

thomas Ysrael on December 19, 2017:

If the government taxes the rich then the rich would just decrease the amount of money that they give their hard working middle class employees. So in the end the rich still make the same amount of money and the middle class suffers. Raising taxes would just make the rich tax collectors of the poor and middle class. Also, it's crazy to say that the rich are republicans because look at hollywood where 90% of them are democrats and the other 10% don't give a shit. In the end, we should decrease taxes so people can actually keep the money they make.

Rainbows and Unicorns on November 07, 2017:

I think this is a bunch of Bullshit!

Blanca Zuluaga on November 07, 2017:

We should tax the rich... inequality will keep increasing otherwise

aye lmao on October 25, 2017:

we should just go with it man

josh on October 09, 2017:

i believe we should at least tax the rich or at least raise it up a little we might end up in debt if we keep borrowing money from other countrys we should at least try to pay off some of the debt by taxing the rich

Lois St Cyr on June 26, 2017:

If it wasn't for the poor, the rich wouldn't be rich. Please raise minimal wages to 12 to 15 dollars in Louisiana. Plus raise Retirement Social Security. Rent and every thing is gone up ridiculous high. Why should i move in a bad neighbor. You wouldn't. You want an increase so you should see the same for me .i also worked hard for 45 plus yrs. I deserve better income too. What ever reason you have , i have that plus more . i am black in america .You want to change places.i went to college and graduated in los Angeles. Just like you feel you should get more. I feel the same. SHAME ON YOU ALL FOR BEING SO SELFISH. NO HOME TRAINING AND NO GODLY HEART. ONE DAY YOU WILL REMEMBER ME. LOVE YA'LL ANY WAY !!!!!!!

Lois St Cyr on June 26, 2017:

If the rich taxes can't be increase then raise waises all states , especially louisiana to 12 to 15 dollars hrly.

Kokinyertwot on May 07, 2017:

Warren Buffet does NOT need a 9 million dollar tax break, does he?

JON EWALL from usa on April 14, 2017:

Hubbers

OPM other peoples money , that's the way to go

3/1/14 Obamas set new record for vacation travel $100 million

http://www.bizpacreview.com/2014/03/01/obamas-set-...

thanks to the taxpayers!

ptofgogjkf on April 14, 2017:

yes they should

BDS on April 11, 2017:

The world isn't fair. Who the hell ever became a billionaire thinking about what was fair? I'm for taxing the rich because it just feels good.

steve smith on November 18, 2016:

we need to tax the rich. giving a tax break will only postpone the tax and soon, somebody will have to pay for them. borrowing money from China and so forth, yeah that isn't working. So who do you want to be hit with taxes the 1% who could afford to lose a yacht or the poor struggling to survive?

Earl Owens from USA on November 03, 2015:

A man knocks on your door puts a gun in your face and says give me all your money so I can give it to the poor. You call the police. You find out, He IS the police.

Taxation is theft and immoral. Period end of story

JON EWALL from usa on May 23, 2015:

Hubbers

There is a reason why

GEE, https://www.youtube.com/watch?v=y5CsrTMZAhA

SHARED AGENDAS BARACK OBAMA

http://www.discoverthenetworks.org/viewsubcategory...

3/5 /15 A crippled presidency http://www.washingtontimes.com/news/2015/mar/5/don...

his actions speak louder than words

Adam Palmer from New York on May 22, 2015:

Now I must say, this is a well organized article and I truly enjoy how well you layout the pros and cons. Saying this, I also want to add in that the rich most likely because rich due to their work and dedication. The United State Constitution should defend that instead of public persecution.

Brad on January 03, 2015:

what happened to equal protection?

wba108@yahoo.com from upstate, NY on January 03, 2015:

A favored tactic of the socialists,communists and leftists is to use the rich as a scapegoat. this only works because of the Constitutional ignorance of the American people. The plain truth is that the supposed rich are already paying more taxes both in total amounts and as a percentage of their income.

Our competitive edge worldwide will disappear if this kind of left wing social engineering is permitted to continue. The example in Europe should be enough of a warning, that's why they had to immigrate to America to begin with. Americans are also historically ignorant, because the plain understanding of the past would refute they leftists in every way.

Brad on December 23, 2014:

It is wrong to single out the rich with higher taxes.

Gays won claiming unequal protection, why shouldn't the rich have success with that same claim.

why isn't the different tax rates unconstitutional?

Arthur Gwynne from NYC. NY on December 12, 2014:

I think individual taxes at the Federal level should be completely removed. But I also think that states and local governments should be free to tax as they - and their communities - see fit. I'm fine with my tax monies being spent, for instance, on NYC health, education, and infrastructure. I'm not fine with my tax monies being spent on killer flying robots, corporate bailouts, or a police force (FBI) that has no oversight whatsoever.

JON EWALL from usa on May 15, 2012:

PaulGoodman67

Welcome to America, the land of the free and the brave.

Check this link and be the judge. The President is running his campaign on ''FAIRNESS''?

5/09/12

Obamacare, Taxing jobs out of existence

WHY are companies not hiring?

http://www.humanevents.com/article.php?id=51364

Dragon on April 07, 2012:

To be frank, the rich do not get tax breaks. People who own businesses get tax breaks. And since we live in a country where anyone willing to take a risk can start a business, the system seems fair enough to me.

The government encourages people to start a business and make a large amount of money by giving them tax breaks. They do this because they know that if you start a successful company (which is honestly the only way to become rich, except in a small % of cases) even at a low tax rate, a wealthy person will pay more taxes in a month than the average job person pays in their life.

wba108@yahoo.com from upstate, NY on February 07, 2012:

Good analysis, pretty balanced! I tend to believe in less government and less taxes because the larger the government gets, the greater the temptation to exploit the system. An analogy is that big piles of goodies attract more ants.

John Crozier from Newcastle, Tyne and Wear, England on February 02, 2012:

If you raise the taxes on the rich they are more likely just to get up and leave to another country or route their money through swedish banks, these are the people that can do that. Even though there are more 'working class' people in this world than rich people, you still have to think that they are paying the same tax percentage as the 'working class' and that will yield more money for the government. In the UK to be in the top ten percent of earner you only have to make £140,000 per annum, rich people are good for a countries economy don't drive them out by singling them out and charging them more.

WD Curry 111 from Space Coast on October 06, 2011:

Paul.

Thanks for coming over. We can use the help. Americans should keep this in mind. Our original sage and elder statesman (Benjamin Franklin) said this, "You will never eliminate the poor by getting rid of the rich." As an artist, I love rich people. They are my best customers. As far as I'm concerned, I hope we let them hang on to their money. The middle class and the poor aren't buying right now although I have lots of top notch stuff in their price range!

P.S. I need to know about that membership thing, a little help please.

mortimerjackson from California on October 01, 2011:

So if the government wastes tax money, why should anyone pay taxes?

What country can you think of as being a better tax haven than America?

There is no public appetite for raised taxes because middle class and low class wages have been stagnant for decades.

There will always be tax cheats.

Higher taxes do not lead to less investment. With the right infrastructure, it can (and has in Europe) provide services for smaller businesses to grow and develop, thus encouraging competition.

Socially divisive? So when the rich decide to stun middle class earnings, that's not class warfare? But when the middle class demand that the rich pay more taxes, that's class warfare?

This is not a debate between people with a different ideology. It's a debate between people and corporations.