Fairness in Taxation

November 22, 2011

Political Theory


Since we talked about fairness and equality in lecture last week, I wanted to do a brief blog post on a current event BESIDES Occupy Wall Street, but an event that still addressed the issue. Interestingly enough, I found an article about Fairness in Taxation by one of my state’s congresswoman, Jan Schakowsky.

Representative Schakowsky has introduced the Fairness in Taxation Act. The goal of this act is to create new tax brackets for the wealthiest Americans. The basic break down is that the more money you make, the more you should/would pay in taxes. This idea isn’t exactly new, but Schakowsky hopes that this act will create more fairness in our taxation system.

In class we discussed how inequalities create incentives in society, but do you think that idea applies here? Do you think the introduction of these new tax brackets are fair? Granted, this article is very democratically biased (Schakowsky is a Democrat from Illinois), but I found it interesting and relevant to our lecture, nonetheless.

Lastly: I didn’t really want to give a full summary of the article, so before you comment, I suggest you read it (it’s short, I promise!).

 

Source: http://www.huffingtonpost.com/rep-jan-schakowsky/fairness-in-taxation_b_837139.html

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7 Comments on “Fairness in Taxation”

  1. ngamin1614 Says:

    I personally agree with this tax brackets idea where the richer pay more of the taxes. I think Warren Buffett may have actually suggested this as well, saying something like if all of the richest people in America got together and paid a large sum of money to the government, then we would be on track to pay off this huge debt we have.

    Honestly, I don’t think it’s unfair and I think it’s the right idea. If I was rich, I personally wouldn’t mind paying higher taxes in order to help somebody who is not as well off live. Some may argue that increasing taxes may discourage investment from the richer people, but in the end, most of the richest people’s money is just sitting there anyways. The tax money really won’t make a dent in their income and will not discourage investment. Honestly, I think it’s kinda stupid that the richest don’t pay the highest taxes, in my opinion, the idea mentioned in this article is the most fair idea we have. Lower taxes for the not as well off will allow them to have greater income and will allow them to support themselves and their families with better ability. Higher taxes for the rich will not have a big effect on their income. They will obviously still be able to support themselves and buy whatever they want.

  2. dkap7 Says:

    Recently in discussion this idea came about. There would be a tax curve that gradually taxes a larger percentage based on the profits that an individual makes. Although this proposal seems to go against the democratic ways of America, being that equalities would be different for people based on social class, it does bring about a good point on ways to help improve both the economy and the government deficit. Also, when discussing whether this proposal goes against a democracy, it is important to look at America as a capitalistic nation. America does not run a completely free-market with no government interference. Look at the bailouts that were given to these huge wall street banking corporations. If these bailouts are given to the wealthy individuals, then why shouldn’t they be taxed more as well. These people can definitely afford to be taxed more, whereas the lower proportion of income individuals do not have the means to be taxed as heavily as these wealthier Americans.

    The American economy is also experiencing a very rough time, where people of the lower income proportion experienced larger decreases in their payroll then the two percent of the wealthiest Americans. These wealthier Americans have created such a large gap between them and the lower proportion, not saying this is wrong because we do live in a capitalistic society, however, these people should be taxed more to help improve our economy and the state of our country.

  3. walirajat Says:

    In wake of the fairness of taxing the rich higher rates, I am in complete agreement. Additionally, as a student of taxation, there is a common misconception that I wish to first clear regarding taxes. Many individuals feel that earning high income levels means ALL your income will be taxed at the higher rate. This gives rise to a lot of anxiety and unwillingness to increase tax rates for the rich as many believe it would be prohibitive and discourage investments and job creation. That is clearly false. Our system is a progressive taxation system, i.e there are various income brackets and the more you earn either keeps you in the same bracket or pushes you higher. However when you are told that you are in the 25% tax bracket, it means that above a certain figure, any additional income you earn, is taxed at 25%, NOT all of your income.

    For example, if the tax code says that all my income up to $10,000 is taxed at 10% and any income above 10,000 is taxed at 15%, then if my annual salary is $15,000, the first $10,000 is taxed at 10% and the remaining $5000 is taxed at 15%, as compared to many people feeling that the TOTAL $15,000 is taxed at 15%. This makes a huge difference and keeping in mind regarding the number of millionaires this country has, a higher tax rate for them above a certain income threshold will not be too great a burden.

    Finally, the GOP Presidential candidates have been talking about over hauling the tax code and have been coming up with their own version of the tax codes. For example Herman Caines infamous 9-9-9 plan that would charge a flat tax of 9% across the board. Clearly based upon my explanation of marginal tax rates above, the middle and lower income class of people will have to bear the brunt of the unfair tax code while the rich will be absolutely indifferent and get away with paying extremely low taxes.

  4. ianbaker2041 Says:

    I’m probably the only fiscal conservative to comment here, but I’ll do so with pride. I do oppose, have always opposed, and will continue to oppose any sort of progressive taxation system because it is inherently unfair. I support a proportional (flat) tax because the wealthy will still pay more in dollars (which seems fair to me), but they won’t have to pay a higher percentage. The rich make more money, but it does not follow from this that they should pay more in taxes by percentage of income. I agree that they should pay a higher dollar amount, but a higher percentage? No.

    I’ll use my parents as an example. They are divorced; my mom works part time at a community college on a wage and gets alimony from my father; my dad is a veterinarian by training who now works for Pfizer. He’s entering his 19th year with the company. My mom makes around $60,000 a year in taxable income; my father (after alimony and child support are covered) around $350,000. Last year, my father paid over $120,000 in taxes while my mom paid far less by percentage. Fair? No way. My father works way harder than my mom, yet he pays more. Sure, my mom raises my little brother, but she doesn’t put in anywhere near the work that my dad does, as he also raises a small child. At the end of the year, my dad will put in 15+ hour days finalizing performance reviews for his boss (who usually doesn’t see her family more than a couple times a month to earn her $500,000 salary); he regularly spends weeks overseas in Europe; he goes through an immense amount of stress just to make that money. I’m not trying to say that everyone who is rich worked very hard, but I know more than a couple who did work extraordinarily hard, my dad being one of them, and he resents paying high taxes for what he sees as honest work. I was raised on the principle that there is no easy way to get rich, and my dad is a perfect example of that.

    It just does not seem fair to me that people who put in LONG days to make a lot of money should have to pay a higher percentage. When you combine the fact that the rich pay a higher percentage with the fact that the money largely goes to serve the poor, it makes the tax burden so grossly unequal that, living in a country based on equality and fairness, I just cannot stand behind tax proposals to further widen the divide between those who carry the burden and those who don’t. There are people genuinely in need in this country; I’m not that far off the right-wing cliff. But there are a lot of people in this country receiving when they should be paying-or at least paying more/ receiving less. American economics thrives not on Reaganomics or high taxes; it thrives on free markets that allow everyone to reap the benefits of what they have worked hard to earn. If we want equality, wouldn’t the same percentage for everyone be fair?

  5. tchung22 Says:

    I don’t really think the idea of inequalities creating incentives applies here. Raising taxes for the rich will help the infrastructure of the U.S., but it’s not like the poor will receive enough money to give up on their dreams of becoming financially stable. I think that the introduction of these new tax brackets is fair. The last comment argues that it isn’t fair that richer people need to pay a higher percentage of their income because they have worked hard to earn it. However, since taxes are progressive, the people that make more money despite higher taxes will stay take home more net income. Not only do I believe higher taxes is fair, I think it may even be necessary due to the financial state of the U.S. and the debt crisis.

  6. tylerhoffman1 Says:

    The author makes some interesting arguments about a relevant topic. Most people in the Occupy Wall Street movement (and democrats) look to taxation as the solution for the gap between the lower and upper classes as well as our governments debt problem. It is a simply and common idea that if you take money from the rich, and redistribute it to the poor, all will be well, the gap will diminish and our government will decrease the debt it owes to other countries. I guess one of my questions for the Senator would be the following, just why do these people that happen to fall within your suggested tax brackets be obligated to pay more? Do these people use more tax dollars than the poorer classes…I’d like to see proof. I believe that people that are within those suggested tax brackets stimulate the economy as it is, like another person said, you would be just taking money away from the rich that they would use to invest, thus reducing their incentive to produce at a such a high rate. While I disagree with the suggested tax brackets for the wealthy, I do agree with taxing capital gains at a higher level then current rates.

  7. ldahbour Says:

    In class we discussed how inequalities create incentives in society, but do you think that idea applies here? Do you think the introduction of these new tax brackets are fair?

    I will have to agree with ianbaker2041. The income that someone achieves is reflective of the work they put in society. To charge more money to people who do more work is an idea that causes me great frustration. In addition, inequalities here are not creating any incentive for people to work harder because it just means a greater percentage of their money will go to the government. Which thus far (in my lifetime) has yet to prove its fiscal responsibility. The tax code in this country needs to be re-evaluated in a way that maintains our government spending while promoting hard work.

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