Wednesday, September 29, 2010
In Tax Cut Plan, Debate Over the Definition of Rich
With the approaching elections, politicians are afraid to voice their opinion about the on-going debate determining the fate of the Bush tax cuts. The Obama Administration feels it is important to eliminate these tax cuts for the wealthiest Americans as the economy cannot afford to have them continue. The problem arises when defining who fits in the 'wealthiest Americans' category and who is lucky enough to not be rich. The current level being debated on is $250,000 and up. But many feel that is too low and it should be raised. The argument supporting the elimination of these tax cuts is that the economy cannot afford it anymore and one proposal put forward is the Millionaire Tax. However, many Americans earning above the level stated can relate more to middle-class than to millionaires. The opposition claims that this will hurt the economy more by affecting small businesses. But it is important to take geographical locations into account as it is likely an income of $200,000 in one city will not bring you to the millionaire lifestyle in another. With unemployment rate at 9.6%, and the tax cuts expiring on Jan 1st anyway, the government must come up with a plan and fast.
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Taking geographical locations into account for income taxes could be a good idea to spread the tax burden among the rich, but it would bring lot of complexities to an already complex American Taxation system. Also, this could also mean immigration of the "rich" into low taxed demographic areas in the country, and eventually leaving the tax burden on to the middle-class families.
ReplyDeleteI agree with Bibhav, about the geographical locations. However, I also do think that $250,000 for a family (assuming it's 4 members) is extremely low and would give more tax burden because they tend to have higher expenses such as feeding food to kids, clothing, even college tuitions etc. Again, this will complicate the already complex American taxation system. I am not sure if this is relevant to the article but I think the government should do something about the taxation system. For instance; make it simplified because this is already costing Americans who do not understand how this taxation system work to the hands of the accountants.
ReplyDeleteIt would complex the Taxation system further but still must be taken into account if the idea is to spread the tax burden over the wealthiest Americans. True, if the Tax system was simpler, there would be less fraud and people would have fewer excuses not to pay their taxes. But keeping in mind that the elimination of the Bush Tax Cuts are likely to affect families who aren't exactly the 'rich Americans', it is one of the many aspects that must be taken into account to avoid making the lives of more American's difficult in the current struggling economy.
ReplyDeleteIncreasing tax revenue to reduce the national debt would seem a good idea, but both the Congress and the IRS would have to come up with alternate fiscal policy to spread the tax burden on the rich. But again, it would depend on the IRS to define who would fall under the "rich" or the "middle-class" families.
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