Suchergebnisse

In the United States, the payment of taxes is effectively a "pooling of money" by the nation's citizens to fund the services of government. These services include, but are not limited to: the national defense, infrastructure, the judicial court system, police and fire protection (delivered at the federal, state, and local levels), education (delivered at the state and local level), the general administration of government, and support for truly needy citizens. Deciding how much money should be appropriated for this pool and how it should be spent is almost always a subject of contentious debate. The same is true when deciding how taxes should be apportioned. As to the latter, the debate inevitably devolves into an argument over fairness and economic efficiency. The primary source of federal tax revenues (excluding Social Security and Medicare taxes) is a progressive tax on the earned income of individuals. This essay will make the case that the progressive income tax is plainly inequitable. It will also review the alternatives to progression in an effort to identify the most equitable (or least inequitable) tax system. Adapted from the source document.

In October 2011, the Congressional Budget Office published a report, "Trends in the Distribution of Household Income between 1979 and 2007," showing that, during the period studied, aggregate income (as defined by the CBO) in the highest income quintiles grew more rapidly than income in the lower quintiles. This was particularly true for the top one percent of earners. This CBO study has been cited by the media and politicians as confirmation that income inequality has increased "substantially" during the period studied, and has been used to support President Obama's claim that income inequality is a serious and growing problem in the United States that must be addressed by raising taxes on the highest income earners. We will show that much of what has been reported about income inequality is misleading, factually incorrect, or of little or no consequence to our economic well-being. We will also show that middle-class incomes are not stagnating; in fact, middle-class incomes have risen significantly over the 29 years covered by the CBO study. Lastly, we will address assertions that the rich are not paying their "fair share" of taxes. In our view, Americans should care about the well-being of the nation as a whole rather than whether some people earn more than others. To that end, the focus of public policy should not be on equality of income but on equality of economic opportunity. Policies designed to reduce income inequality inevitably involve redistribution of income through increases in transfer payments and marginal tax rates. But these policies discourage hiring and investment, which depresses economic growth and opportunity. In sharp contrast, policies designed to enhance equality of opportunity will increase economic well-being for all, most particularly those in lower income households. Adapted from the source document.