Should We Tax the Rich More?
The debate on taxing the rich more is a long-standing one with different points in support of the argument and others against it. Taxation is an essential part of the economy as it provides revenue for the government, which is then used to fund important projects in infrastructure, education, and healthcare, among others. Tax regimes are progressive, meaning the more a person earns, the more they are taxed. Taxes vary across states and localities. One main area of concern when it comes to taxation is the fact that the super-rich pay much lower taxes in proportion to their income and assets as compared to the middle and lower-income earners in the country. The current tax regimes have been a point of contention, with many arguing that the rich should be taxed more.
Warren Buffet is one of the wealthiest men in the world, and his admission that he was subject to a much lower tax rate as compared to that of his secretary sparked a fierce debate. The fact of the matter is that the wealthiest individuals in the population really do pay less tax than the average citizen. The New York Times article titled ‘The Rich Really Do Pay Lower Tax Rates than You’ explores this claim in depth. The article uses data from a 2018 study across different income groups that shows that the 400 of the most affluent Americans paid significantly lower tax rates compared to other income groups in the country. Such information is shocking, given the vast difference in income among the groups. The current tax rates are a world away from those of the 1960s when the very richest people were subject to a higher tax rate than the rest of the population (Leonhardt 1). The main reason for this is the plummet in taxes, such as corporate and estate taxes. In contrast, the poor and mid-income earners have had to pay higher taxes in payroll taxes, while they do not benefit much from a reduction in estate and corporate taxes.
Forbes author Howard Gleckman tackles this topic in the article titled ‘How Should We Tax the Rich?’ The article shares similar opinions with those of the New York Times article. Gleckman explains that tax regimes have become less progressive over the past few years, and says that the country should restructure its tax systems. He gives different areas where tax for the rich should be reconsidered. The rich have come up with ways to avoid taxes, and this is the reason why they pay lower taxes. One of the ways they do this is categorizing income as capital gains, which are subject to lower tax rates. He offers the main areas of consideration in taxing the rich, including reforms to the estate tax, introducing a wealth tax, taxing unrealized gains, and raising taxes on ordinary income and capital gains (Gleckman 1).
The efforts to tax the rich more have often been met with stumbling blocks. An excellent example of this is the 2014 tax cuts by President Trump, which favored the very wealthy. Such a step is a step back from efforts to ensure proportionate tax rates for various income groups. Although President Trump touted the tax cuts as beneficial for job creation and for the middle-class, it has since become clear that the cuts disproportionately lower rates for the very rich. A Bloomberg publication titled ‘A Year after the Middle Class Tax Cut, the Rich Are Winning’ explores the intricate 2017 tax cuts. The consensus is that the benefits of the tax cuts on the economy will fade over time, leaving the very rich as the only beneficiaries (Steverman et al. 1).
In conclusion, there have been numerous studies and findings that show the disproportionate tax rates among the various income groups in the country. Tax regimes are supposed to be progressive, with the wealthiest paying the highest tax rates. However, in the case of the United States, the very rich pay lower tax rates, begging the question, “Should We Tax the Rich More?”
Gleckman, Howard. “How Should We Tax the Rich?” Forbes. 11 September 2019. https://www.forbes.com/sites/howardgleckman/2019/09/11/how-should-we-tax-the-rich/#7caba3ac38bdLeonhardt, David. “The Rich Really Do Pay Lower Taxes Than You.” The New York Times. 6 October 2019. https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.htmlSteverman, Ben. et al. “A Year After the Middle Class Tax Cut, the Rich Are Winning.” Bloomberg. 18 December 2018. https://www.bloomberg.com/graphics/2018-tax-plan-consequences/