Taxing the rich and poor?

Question

Hi guys,right im writing this arguement 'why its right to tax the rich a higher percentage when they earn other a certain amount then the percentage you get taxed under a certain amount. I think its like 20% below 30k, 40% above? Anyway could you post some reasons why it right to do it? I need to persaude someone who feels it is not right to tax differently as the rich have earnt their money. Whilst i agree, i have fundamental ideas, which i make me feel it is fair to an extent. I feel it creates more equality, and despite the common fact that noone no matter what they earn, wants to be taxed more; but quite honestly it is right to tax those more who can afford it? a fundemental idea of mine to back this up, is if taxes were all the same percentage, then for the government to bring in the same amount of revenue, they would have to increase the tax, meaning the lower earners suffered more from increased taxes, so surely its morally right tax high earners more? Thanks for ur view!

Answer 1

I think you have the basic argument outlined in your question. A flat rate tax would be simple to administer and would eliminate the disincentive to work when one is paying a high rate of tax. But it would impact disproportionally on the lower paid.

We accept that everyone needs a certain minimum amount to just exist at an acceptable level. So a personal allowance was introduced to exempt the first tranche of income from tax completely. Income above this as taxed at a basic rate, currently 22%. Most taxpayers pay at this rate.

A small "starting rate" band was introduced to ease the impact of taxation when earnings rose above the level of the personal allowance. This rate is currently 10% and seeks to encourage the taxpayer to look to increase their income.

Once your earnings reach just over £38,000 a year it is assumed you have a comfortable lifestyle. Additional income will only be used to buy additional luxuries. So this additional income is taxed at a higher rate since it does not have a detrimental effect on the taxpayer's lifestyle. This seems perfectly logical to me.

Of course, there are a number of associated points which you may like to discuss.

Firstly, the actual amount of revenue raised. This actually divides into two questions. Are the services paid for by central government the ones that we would wish to be funded this way (i.e. should education be available to all or should this be something that is only funded by those who have children)? And, secondly, is the money being spent wisely? This second point brings up the question of money wasted in unneccessary administration costs, etc.

Are the levels in the current system set correctly? By this I mean the personal allowance which represents income exempt from tax and the level at which the higher rate kicks in.

Personally, I don't think the present system has it right but I feel the general principles are correct.

Answer 2

I agree with the majority so far. It is unfair to tax higher earners more. In an ideal world everybody would be equal but life isn't like that! Those people who have achieved and been financially successful by studying for a profession or sheer hard work should not be penalised by ever more taxes. It removes the incentive for everyone to work harder. This government wants to tax you on your earnings, on your car and just about everything else down to the rubbish you put out which incidentally, I was under the impression that my ever increasing council tax paid for. I wouldn't mind paying additional taxes so much if the money was spent wisely but it's not - it's just wasted.

Answer 3

In politics, this becomes an emotionally charged debate with few (if any) reasonable arguments on either side. You have to take as rational an approach as possible (with facts, not with opinions).

Before Reagan took office, we had tax rates above 75% on some things and the highest overall bracket was 50% for rich people. Reagan cut the highest down to 39% (I believe) and the economy seemed to lurch forward. Bush did something similar by cutting all tax rates across the board and creating a new lower bracket of 8% for the lowest income levels. Again, the economy lurched forward and is still growing.

The idea behind the lowering of taxes is that they're a heavy burden for everyone, including those who are of the greatest benefit to the nation's wealth: small business owners, corporations, and investors (who face a capital gain tax).

In contrast, the reason for having higher taxes is to allow the government to pay for all the programs in place (like social security) because the bankruptcy or insolvency of the government would hurt everyone.

The reason for having lower tax levels for lower income brackets is because all people require a minimum amount of money just to live on. Everyone needs rent, food, clothes, transportation, etc. just to be productive in society, and the government wants to remove the burden from the lowest brackets completely. There is also an issue of single parents who can't cover their expenses at all due to having children to care for, since children require both time and money, and single parents with more than one job create social problems in their children who aren't being parented. Currently, families under 20,000 are getting more back in taxes than they actually pay in through two "refundable credits" (additional child tax credit and earned income credit).

When Bush cut taxes, federal tax revenues actually went up, not down, because when the economy lurched forward, more people were hired at jobs, unemployment went down, and more people were actually paying taxes than before (millions more).

The trick for the government is to figure out when this particular benefit is no longer available. When everyone is working, there's obviously no more benefit to lowering taxes. The government will only lose money.

Answer 4

You're mixing alot of terms-- fair and right are not always the same thing. Then there is also practical. Fair and right are also VERY subjective.

Fair would imply equal treatment. Taxing some at higher rates than other is not equal treament - hence not necessarily "fair". And in the us, not only do those who make more pay higher rates, many tax policies are phased out at certain income levels (e.g. retirement accounts, child tax credit, eduation deductions, etc.). So, not only are higher rates charged but the same policies are not equally available to higher earners-- Is my child not the same as a child of somebody who makes less.

And, there are many programs for those who make little that are not available to those who make more (e.g. earned income credit). Frankly, I'm ok with those who make next to nothing pay very little in taxes since one needs a bare-minimum just to survive -- food, clothes, housing, etc. But at the same time, we should not penalize or demonize those who make more.

That said, in the US at least, one's federal taxes are based on last dollar earned. So, somebody who makes 100k per year gets taxed the same amount on his/her first 30k of income as the guy that makes 30k.

Finally, again in the US, the top 20% pay roughly 72% of the taxes but make up about 62% of the income. The bottom 80% pay roughtly 27% of taxes but have 38% of income. So that indicates that even with high rates and earnings-- the more affulent pay a higher burden of their taxes vs. their income. Is that fair?

Lastly, why is that we want people to be successful but then when they are, we want to penalize them? Generally, those who make alot of money got there by working hard, starting businesses, etc. A small percentage of millionare+ people in the US, roughtly 15% inherited money. The remainder made it by businesses or wages earned.

Answer 5

Those who earn more pay substantially more, as even if they are taxed at the same percentage as the poor they will actually be paying more in tax. So 20% of £1000 is very little but 20% of £50K is ten grand. So the rich are putting more in anyway.
Why should the rich be penalised for having better jobs and probably working harder? When you over-tax the rich, then there is no incentive to keep working. Ask yourself, if you are working and paying tax but Joe Bloggs down the road stays at home on the dole doing nothing but seems to have the same lifestyle as you, what is the incentive for you to work every day? Why not stay at home and claim the dole, like him? And that's the basis of my argument - if you penalise the rich for working hard, then you take away the incentive to work hard, then everyone - eventually - becomes poor.

Answer 6

The concept of burden of tax should be equalized

The Bill of 10 for somebody who has a an income 100 is 10 %

for the one with income 1000 is just 1 % and you see for somebody who has just 10 as income 100 %

Office no % works on the 0 or negative income group , so tax them for better !!!!

Answer 7

Once you are paying a higher rate of tax the income you are taxed at 40% on is only subject to 1% NI as opposed to a lower earner paying 11%.

Answer 8

In other words, you feel it is right to penalize somebody a greater percentage of their earnings because they worked hard and smart? That's what it all boils down to. You have the right to take away from somebody who busted their tail end in order to become successful? And you are going to just give those earnings to the people who are unable to achieve? That's dead wrong both ethically and logically.

Logically, what is the incentive to succeed and achieve if the fruits of your labor are going to be taken from you? You are creating a society that encourages apathy at both ends. You are creating a society where the most capable of success are going to either not bother or they are going to cheat.

Answer 9

i pay over 23k a year in tax then i get taxed on whatever i buy etc etc so the government get plenty, if they didnt all waste the money we do give them the country would be so much better off. every one should be equal, or are they trying to build up a them and us scenario?

Answer 10

Tax everyone the same, richer people have more to pay out like mortgage's and so on....