Essay on Why Taxing the Rich More is Wrong
- Category: Economics,
- Words: 1308 Pages: 5
- Published: 03 May 2021
- Copied: 114
Recently the US Government has been debating on taxing the rich more. The poorer people and the richer people are directly affected by this because the richer people have to pay more, and the poorer people will get more money from it. The middle class will be indirectly affected by it because the economy will change, but overall, it won’t affect them as much. Overall people either think the taxes should be raised for the rich or the tax shouldn’t be raised for the rich. The rich shouldn’t be taxed more because it will hinder the amount of money spent by the average person which will result in lack of economic growth.
Raising taxes on the rich would cause; small businesses to close down and resist people from starting their dream businesses. In today’s society small businesses are common because, “Lower taxes mean higher potential profit, so individuals are more likely to invest and start new businesses” (Messerli). With higher taxes people will have less money to save and start a small business that will last. Also, “Tax hikers for those making $250,000 or more means hurting job creators and small businesses” (The Rich Are Taxed Enough). Taking away money that people invest and create new businesses with will hurt the economy over time. The higher companies will grow meaning that the economy will decrease. This further decreases the number of small businesses in the economy. Another website adds on to this by stating, “That is, with a wealth tax, higher income and death taxes, incentives are reduced for productive economic undertakings, namely, the risk-taking activities of entrepreneurship and investing that are critical for economic, income and employment growth” (Tax the Rich, Hurt Everyone). This article showcases the detailed issues behind how taxing the rich more will affect entrepreneurship. Higher taxes mean that people don’t have savings to fall back on if their small business doesn’t work out. All of these facts show us that raising the taxes on the rich would result in small businesses closing down and less people taking risks and becoming an entrepreneur.
Another issue if taxes are raised is that people will not spend as much money and put money in investments. Spending and investing money are better the economy because the government relies on the consumers to buy goods so they can pay back the countries for their exports. If consumers don’t spend as much, then the county’s economic growth will decrease, and the country will owe money to other countries for exported goods. Since spending and investing money is so important in the economy, taxes shouldn’t be raised, “Since the rich always alter their spending, investment, work, and tax behaviors in response to rate increases, the amount of revenue brought into the federal government can actually decrease, which is explained by the economic principle known as the Laffer Curve” (Messerli). The Laffer Curve is a diagram used to show the relationship between tax rates and tax revenues. This diagram shows that the peak of graph is not at the higher end of the tax percentage. This shows that higher taxes will actually decrease tax revenues, meaning that the economy will decline. Spending however, will always make the economy go up because the more consumers the country has, the better the economy will be. Joe Messerli adds on to this by adding that, “Tax increases usually have a negative effect on the economy, since consumers have far less money to spend and invest; slowing the economy consequently decreases revenue (since incomes are smaller) and increases spending (due to increased entitlement spending on unemployment, welfare, etc.)” (Messerli). This further explains the contrasts between spending money and paying more money in taxes. Taxing the rich is a bad idea because, “People with more money tend to save more; people with less, to spend more. So, if you lower taxes on people who spend more- the less well-off, that is- you get more spending. If you lower them on the proverbial ‘1 percent,’ you get more saving” (How Do Tax Changes Affect Spending?). Messing with the taxation causes less investment which is also a very important part of the economy. Overall, these facts further develop that raising taxes will cause people not to spend as much money and put money in investments.
Finally, the rich already pay a lot of money in taxes. Statistics show that, “The top 1% pays nearly 40% of all collected federal income taxes. The bottom 50% pays just over 2%” (The Rich Are Taxed Enough). This statistic directly shows us that the rich pay lots of money in federal taxes and shouldn’t be taxed more. Many other people also have statistics over the tax percentages including the liberal Institute on Taxation and Economic Policy which estimates that, “combined federal, state, and local taxes are still quite progressive. They find the top 1 percent pay a 33.7 percent tac rate. The poorest 20 percent of Americans pay an average 20.2 percent cumulative tax rate” (Michel). This statistic gives a detailed and descriptive percentage of how much the top 1% pays in combine taxes and compares it to the poorest 20%. New data shows, “the highest- income taxpayers are the only group that pays a larger share of total taxes than their share of total income” (Michel). All of this data tells us that the rich pay much more in taxes already and shouldn’t have to pay more.
On the other hand, some people say that the rich have enough money so they should pay for the needs of others who don’t have a lot of money. Many people say, “The rich already have enough money to live a great lifestyle; it won’t hurt them as much to increase their taxes” (Messerli). This point makes sense because they do have enough money for a great lifestyle and many other people could use the money. However, the rich should not be forced to pay for other people’s things. Many of the richest people have worked very hard for the money they have and that shouldn’t be taken away from them. Another argument is that “Revenue for defense, education, health care, social security, and so many other needs must come from somewhere” (Messerli). This point also makes sense because the money does need to come from somewhere and it makes sense to get it from the people with the most money. However, the rich pay lots of taxes to the government and it is not their fault that the government doesn’t spend in on the right things. Overall, “Taxing the rich does nothing more than shift money from the private sector where it is usually invested and spent efficiently, to the government, where it often ends up going to special interests or campaign contributors, or where it’s inefficiently squandered in government bureaucracies” (Messerli). Taxing the rich just gives money to the government, which is not spent on American necessities. Joe Messerli also makes the point that, “Less money is given to private charities that are usually efficiently run, with more funds instead going lobbyists, campaign contributors, and other friends of politicians. Even when money is directed to worthy causes, the federal bureaucracy incurs so much inefficiency and fraud that only a fraction of it goes to the intended recipients” (Messerli). Taxing the rich more just gives more money to the government to spend on things they want, not things the citizens need. Therefore, the rich shouldn’t be taxed more just because they have a sufficient amount of money and the government decides to spend the money they have now on non-essential things.
After reviewing all of the data, it is safe to say that taxing the rich more will lower the amount of money spent by an average person and cause a decline in the economy. If the government read all of the data and statistics, there would not be a debate whether should be raised on the rich. Keeping the taxes, the same will allow people to become entrepreneurs because of the money they have invested. It’s safe to stay that the rich shouldn’t be taxed more.
“How Do Tax Changes Affect Spending?” PBS, Public Broadcasting Service, 21 Nov. 2011, www.pbs.org/newshour/economy/what-does-higher-or-lower-taxes-do-to-the-economy.
Messerli, Joe. Taxing Rich/Tax on Wealthy (Pros & Cons, Arguments For and Against, Advantages & Disadvantages), www.balancedpolitics.org/taxing_rich.htm.
Michel, Adam. “The New York Times Is Wrong. The Rich Pay More Taxes Than You Do.” The Heritage Foundation, www.heritage.org/taxes/commentary/the-new-york-times-wrong-the-rich-pay-more-taxes-you-do.
The Rich Are Taxed Enough, Intelligence 2 Debates, www.intelligencesquaredus.org/debates/rich-are-taxed-enough.
“Tax the Rich, Hurt Everyone.” Small Business & Entrepreneurship Council, sbecouncil.org/2019/12/04/tax-the-rich-hurt-everyone/.