Resolved we Should Increase Taxes on the Rich
Should we Tax the Rich More?
It’s the right time that national leaders had the great courage to push higher tax on the well-off. There are other solutions available to the country’s federal debt problem that will not require increasing taxes paid by the average earner than to target the one that has the larger means. The government’s decade-long avoidance to the term tax and relying on the silly euphemisms of surcharges and revenue enhancement should end. President Barack Obama has done a significant decision by pointing out the idea of imposing higher tax to the high rollers. This is the part the rich will not agree. Assuming that the president’s jobs bill took effect and it is being funded only not by another borrowing instead by means of increasing taxes paid by the well-off. It will definitely highlight the government’s rally cry and political strategy. Unless the current economy goes well, the progress against debt will have to come from another source such as raised taxes and entitlement cuts and on the high and middle classes.
According to the IRS data, in 1992, income tax rate on the rich society is effectively 26 percent. Now, tax rate is just about 17 percent respectively. President Obama’s proposal would aim to increase the income tax rate by about 2 percent making it at 19%. You have to remember that the Obama Care legislation will not see to take effect by 2013 the time in which Obama will stand for reelection at that point the scheduled to increase tax rate is already at 4 percent. This is just a simplified explanation to something as technical as tax rate which is obviously designed impossibly to comprehend. Supposing Obama Care becomes a law as they are planning to do, and president Obama gets his jobs bill to come true. The effective rate of tax on the rich will go up by 6 percent, so from the 17 percent current rate it will balloon to about 23 percent. Which is almost similar to what it was when the former president Bill Clinton and before Bush started cutting tax rates (Bumpus, Stacey. February 14, 2012).
Raising taxes particularly to the rich will hope to finance the current stimulus plan that will preclude deficit reduction if this will be used by the super committee as tactic. The super committee would then be forced in focusing on taxes on the middle-class and entitlement cuts. As of today, the IRS data shows that $2 trillion is most likely the average amount earned by individuals that have incomes above $100,000 a year (Spangler, Todd. October 12, 2011). The prevailing effective rate of tax of about17% for high earners can yield about an average of $340 billion. Assuming that the new effective rate increases to about 23% as president Obama wanted then the rich would add another $120 billion worth of annual federal taxes. That helps in every way sine the country badly needs a new source of funding and imposing new taxes to the minimum wage earner would cause uproar on the masses. The $120 billion per annum addition to federal income will not directly solve the $1 trillion deficit per annum right away. But it the amount would be a great significance in lowering down the annual deficit, at least the government already solved 10.2% of the deficit problem.
Let’s say the new tax raise, like the increased federal tax rates proposed by President Obama, when enacted. The proposed top-rates would raise effective rates similar to what Barack Obama and his wife Michelle have paid in 2010. Eventually it will add approximately $220 billion annually to the federal income. But then again not the answer to the trillion dollar amount of deficit but will likely to contribute about 22% percent to the problem solution. Even with the help of this new approach or imposing 50 percent of increased tax rate it would only add $660 billion a year to the federal revenue, and against trillion-plus yearly deficits it will just solve much of the problem not entirely. And assuming that the government would rip-off the rich that much, the White House can also expect to get a rain of rotten tomatoes and more.
Requiring the rich of high tax rates is another risky step that should be taken and better to do it sooner. But of course it will not eventually solve the bigger problem but the fact that the amount of money that be accumulated from this tax proposal is a significant advantage. Unless the country’s economy goes back to its former glory, there would be no instances in which increasing tax on the rich can resolve the government’s debt problem alone. Entitlement cuts and increased taxes should simply happen on the middle earning class too and that is when nobody sounds the alarm (Cooper, Hellen. September 11, 2011). Always remember that this new tax proposal may not be too pleasant to millionaires but the reduction of income tax as a result of 2008 economic crash is also contributing to deficit problems. That’s because today about 49% of Americans are not paying income taxes a large due to entitlements. Some people just definitely benefit out from the system and don’t give back and that answers the myth why the national debt is not getting any better.
December, last year the Deficit Commission have found out that entitlement cuts, higher taxes and positive growth of he economy are all needed to resolve U.S. debt and there is other way around to get out of the mess. For President Obama who’s honest regarding the initiatives to raise federal tax rates on the rich it has to be done the right away. National acceptance to this resolve is also needed. Everyone has to take part that means every single one who earns a nickel. It maybe frustrating and painful at first but that is the only way to achieve the greater good. They have to look at it from a different point of view, think the new tax rates as an investment which they will eventually earn from in the long run.
References
Bumpus, Stacey. (February 14, 2012) Obama Proposes Income Tax Rate of 39.6 Percent for the Rich Web Retrieved March 26, 2012 from http://www.gobankingrates.com/tax/obama-proposes-income-tax-rate-396-percent-for-rich/
Cooper, Hellen. (September 11, 2011) Obama Offers Plan to Cut Deficit by Over $3 Trillion Web Retrieved March 26, 2012 from http://www.nytimes.com/2011/09/19/us/politics/obama-plan-to-cut-deficit-will-trim-spending.html?_r=1
Spangler, Todd. (October 12, 2011) Surprise! Who's not paying federal income tax? Web Retrieved March 26, 2012 from http://www.usatoday.com/money/economy/story/2011-10-06/income-tax-nonpayment/50676912/1
