Why Should Wealthy Pay More Taxes – Taxes are a source of revenue for the country, and in the United States of America, the government imposes different tax rates depending on the people’s class and income. However, the percentage of tax they take from any payment is almost similar for everyone. The IRS takes and deals with the taxes, and they are the ones who decide the type of tax they want to impose on people. The high taxes on wealthy people ensure that a healthy economy will run, and people will suffer less financial stress. IRS needs to inject fairness into the tax system so that everyone can live in equity. Imposing high taxes also influences other factors in various ways, ensuring that they should pay high taxes.
To Generate Good Revenue:
Taxes are a source of revenue for a nation and are essential to run a country. A government cannot run only with people’s taxes, but it also needs other money resources. They should take more taxes from the wealthy to generate better revenue. If a government will impose equal taxes on all the people, then lower revenue is generated. Because income is not equivalent for all citizens and taxes should be imposed on the amount of income a person earns yearly. So, if the wealthy have more income annually, then a higher income tax will not harm them but will generate better revenue.
Wealthy Use More Resources:
Wealthy people use more resources than the middle class or below middle-class civilians. They need more security, servants, protection in police, great food, better cleaning authorities, extraordinary entertainment resources, and tip-top places; more money is spent on infrastructure, which wealthy people ultimately use. The resources provided by the government are for the public, and even the rich get benefits from these public resources. The money on such a thing is the taxes that a government collects from people. If a person, who doesn’t have a car, doesn’t live in a great place, doesn’t need any protection, why is he paying some extra taxes? To enjoy such benefits by the government of the United States of America, the wealthy should pay more taxes. After all, the majority of such resources are used by rich people.
Help In Emergency Times:
If the taxes collected from all people are of the same amount and that revenue is used to run the country, then there are no extra funds left to cope with a country’s situation when some emergency circumstances strike up the people of a nation. When a natural disaster occurs, it is the tax of wealthy people which would help the country. In natural disasters, the rich people are not affected, but the middle or lower class are the ones who suffer the most. The revenue generated from wealthy people’s taxes can be used to deal with an emergency. For example, recently covid situation stroked the whole world up. They already worsened the nation’s economy due to this situation; if they took high taxes from wealthy people, it would have helped a little in bringing up more resources to the country and its people.
Eliminate Tax Loopholes:
Wealthy people get many benefits in taxation and the whole process, also known as ‘generous tax benefits. These benefits include delayed taxes and defrayed taxes on inheritance and capital gains. They can give their income and other taxes a bit late, but the same middle class has to file taxes at the specific time assigned by the IRS. If taxes are charged higher on wealthy people’s income, then they can reduce such balances. The rich people use tactics to reduce their taxes; they earn a lot but still use evil tactics to eliminate tariffs. The concerned authorities should monitor the strategies they use. The higher taxes and strict monitoring will eliminate the loopholes in the taxation process and improve the IRS’s tax code.
If the wealthy pay higher taxes, then it ensures stable economic growth. If the middle class and people below the middle class pay less tax than the upper class, a better revenue is generated. Wealthy people earn a lot, and if the same taxes are taken from the poor and the rich, then the tax system is not efficient, and all the revenue is generated to provide equal resources for both classes.
Money Is Essential For Other Resources:
Generating and using revenue from taxes for just economic growth is not the right thing to run a country. A country needs to spend the budget on defense, paying the army, buying weapons, using money in technological and scientific research, etc. Income taxes cannot just fund these things. Instead, a better resource of money is required. If rich people pay higher taxes according to their income, they can aid the country.
Encourage Employment Rate:
High taxes from rich people increase a country’s money, increasing the money to pay as income to the people they can employ. High taxes from the rich mean that they have more properties, sources of income, etc., and can afford to have shares in a company and other businesses. This cycle continues and might increase the employment rate of a state.
According to the surveys, after the 1970s, an increase in income has been observed among the wealthy class of the society in the United States of America. Only the rich have higher income, but still, they have to pay the same percentage of the income tax as that of the middle and lower class. However, no or slight increase in income has been observed in the middle of the lower level. The IRS needs to inject fairness so that everyone should be charged tax according to the income rate they earn yearly. The rich already make a lot and can afford the percent of the tax imposed by the IRS. A higher percent will ensure economic growth and fairness of tax among people.
The high taxes by the wealthy have reduced the burden of taxes on the middle class, providing them relief from very high taxes, which they can barely afford. Even after imposing the wealth taxes, it has been seen that the income of the middle class has been increased a little bit. Even the famous and experienced economists of the United States of America suggest that if the government deducts even $100,000 from the taxes of the middle class and takes high taxes from the wealthy class, it will reduce the burden of taxes on the middle class.
High taxes from the rich represent the moral grounds of a state. As per the surveys and reports, it is noted that 38.6% of the country’s wealth is owned by the top 1% of wealthy families who live in The United States of America. Almost 22.8% of the wealth of the United States of America is owned by the middle and lower class combined. These figures indicate that rich can surely afford it even if high taxes are imposed. They can use these taxes to fund different programs, such as funding students who cannot afford university studies; the economic growth from their taxes can benefit the lower class. Indeed, it will reduce the imbalance amongst society. They would evenly distribute the resources provided by the government.
How Can Rich Be Taxed?
Taking high taxes from the wealthy will increase the capital gains of the country. This tax would lower the labor tax. Although high taxes from the wealthy class might benefit the country and its economic growth for the short term, as for the long time taking high taxes might be disadvantageous. These taxes help the lower class, but the wealthy, in return, are discouraged from making more investments that affect the country in the long term. But there are many other ways in which they can be taxed without increasing the income tax.
Imposing Wealth Tax:
A wealth tax is something that is imposed on the wealth or assets a person has. It is different from income tax as income tax is set on the income you earn yearly, whereas the wealth tax is imposed on the properties or assets you own either through the income you earned or got the wealth from other resources. The wealth tax is imposed on people having personal assets, pension plans, the current cash and bank deposits, financial securities, etc. Things like loans and mortgages are not supposed to be added as wealth and are deducted from wealth taxes.
They are called net wealth tax. Implementation of wealth and the net wealth tax by tax boards vary from country to country. Wealth taxes are opposed by the legal advisors of the United States of America. Still, some advisers recommend the implementation of wealth tax because it does not come under direct tax and can be implemented without any changes to the legal system or the constitution. Even Tax scholars of the United States of America say that wealth taxes are essential and different from income tax; this is an administrative issue and not a constitutional issue.
The revenue generated from such strategies is calculated
The revenue generated from such strategies is calculated by the values of net wealth and wealth inequality. Wealth taxes can significantly reduce income taxes on an individual basis, and they can provide stable economic growth for a country.
Various plans have been proposed for the implementation of wealth tax in the United States of America. For example, Elizabeth Warren, a Democratic presidential candidate, has proposed a plan to take a two percent wealth tax from individuals who own a net wealth of $50 million. A total of six percent should be imposed on people who own more than $1 billion of wealth. According to this plan, 4% of $5 trillion could be collected as wealth taxes in 2018. Other projects have been proposed as well; according to Bernie Sander’s a surcharge of $3 Trillion can be ordered as per reports in the years 2020 and 2029.
The estate tax is implemented when a person’s estate is transferred from the owner to anybody else. The estate includes all the personal assets, legal rights, properties, interests, etc. It does not matter whether the property is being transferred to somebody else on the own choice of the owner when he is alive or it is being shared after the owner’s death. The property is transferred to the person mentioned on the legal will, and it can be a charity or someone close to the owner. If there is no will, then the state laws will deal with it. Such taxes are also known as death tax or Paris Hilton tax. However, in the United States of America, this tax is not liable on those assets left to the spouse or given as a charity recognized by the federal government.
2000 estates per year are eligible to pay tax
Due to such exemptions, now only 2000 estates per year are eligible to pay tax. Even in 2016, only 0.2% paid the estate tax in the United States of America. The legal advisors and the tax expert consultants say that estate tax greatly helps in funding the government. If it is not taken, then a more significant portion of assets is not taxable, and the wealthy don’t pay taxes for the purchases they got. It results in even more burden on the middle and lower class in case of taxes.
If these exemptions are removed, a significant number of funds are generated, but if it is abolished and disturbs the state’s whole budget, a substantial loss of money is observed. The wealthy are left with 0% taxation on their wealth, and a progressive taxation system is disturbed. The people who enjoy privileges and benefits provided by their ancestors and the government should pay high taxes so that an equal and fair tax system is established and a considerable amount of funds are generated
They Should monitor taxes:
The average class of civilians does pay taxes religiously. But the upper and wealthy class of society takes up the leverage and applies some tactics to minimize their taxes. Some even do not pay taxes yearly. They use some connections and cheap approaches to avoid tax. For example, they use borrowing tactics to avoid the tax. They borrow shares and money, and by law, you don’t have to pay taxes on the loans you take.
And they use stocks as collateral, borrow the money. Avoid capital gains and then give back the shares they have used to make money. They use the delayed and tax defrays tactics to grow their earnings without giving any taxes. Also, the wealthy class gives low figures of their income in documents due to which they avoid taxes. However, the IRS takes some strict actions to prevent this and the advantage of law. That the rich people take to avoid taxes.
Lift the social security tax cap:
Social security tax is a tax cut down from an employee’s wage annually. And the percentage is applied to his net earnings. The tax imposed by the states is 12.4% on the salary. This percentage is evenly divided between the worker and the employer. Nowadays, 83% of a person’s wage is subjected to social security tax. Whereas this cap was about 92% back in the 1930s. As this tax A benefits people who benefit from retirement. The state can give more help on retirement. And only 90% of earnings should be taxed annually.
Doing this would generate a total of $805 billion. And the state would be able to provide more benefits to the retired and old age people. Social security tax is only taken from the income the individual receives. The middle and lower class have only one or two sources of income. So they cannot afford to pay high taxes. But the higher level can afford and have more sources of income that are not subjected to tax. Lifting this cap will affect the higher-income workers and not the average one.