Cost of Wealth: Should Rich People Pay More Taxes

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Should the rich pay more taxes? When it comes to the richest 10 percent and the average American, they are some clear differences, but the most obvious issue is taxes. When looking at this problem from an economic standpoint, it makes sense that they pay more. Paying taxes is not only a civic duty but required by law and most Americans will get their federal and state income taxes withheld from their paycheck. The money from these taxes goes to several important places such as providing the salaries for the police firefighters, and other government workers. It’s also used to fund schools, grants, healthcare, parks, libraries, and many more.

The top ten percent of rich people in America continue to grow wealthier every day, controlling over three-quarters of family wealth and in 2013, it was 67 trillion dollars (Sahadi, 2016). It’s clear from how much they’ve earned they could contribute more yet most won’t have to pay as much because of the tax breaks they’ll receive. Having them pay higher taxes will result in tax cuts for middle- or lower-income citizens and redistributed into the economy and stimulate growth. Higher taxes for the rich shouldn’t be a problem because that money would most likely have gone into a savings account. It has been done in past presidencies when Bill Clinton was president, he raised the marginal income rate from 31% to 39.6% and the economy rose by four points each year during his second term. These rates were much higher in the past especially under Eisenhower when it was 91%. The top rate has always been around or above 70% until Reagan’s administration when he slashed those rates to 50%. This resulted in the national debt tripling in the next eight years.

The top 400 wealthiest Americans have more than the bottom half of the nation, with 43 million people living in poverty (Vitelli, 2018). Even with fewer loopholes and higher taxes, they still will have more money than most.

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Well-known billionaires such as Mark Cuban, Bill Gates, and Warren Buffet have all stated they are more than willing to pay even more in taxes. Cuban stated that paying taxes as a very rich person is patriotic and doing so keeps the roads paved, kids in school, and the military paid. He also doesn’t take any tax breaks that other rich people choose to take. Buffett has also been very outspoken about returning his wealth through taxes. He doesn’t think rich people should pay less federal income tax than middle-class Americans. In 2011, he stated he paid over 6.9 million dollars in federal income taxes, which seems like a big amount, but it was only 17.4% of his taxable income and other employees in the office like his receptionist had an average tax rate of 36%. Buffett also believes billionaires have been getting too many passes from the government and it’s up to rich men themselves to look out for the rest of society.

Bill Gates has also spoken about this issue many times before as well. He doesn’t believe the present tax system is progressive enough for the super-rich. Gates also stated if we want the government to give us better education or healthcare, it will have to raise taxes and collect more from those who are better off. He is worth over 90 billion dollars and has paid 10 billion in taxes and believes he should be paying more. He also suggested that billionaires shouldn’t even exist because they represent the failure of capitalism and he doesn’t deserve his massive fortune because he’s only acquired it through luck, good timing and working along with others just as important as he is.

Taxes for the super-rich need to be higher because it will take some of the burdens off of lower and middle-class Americans. Citizens who work for a living will pay twice as much in taxes as the super-rich would. While people who make good money get taxed more than someone who is less well-off based on their income. Almost everyone in the top 10% has unearned income dividends and long-term capital gains, which means they don’t have to pay taxes on them. Someone who makes billions of dollars can end up paying the same tax rate as someone who made $40,000 in the same year. Taxes from state and local to sales taxes take away 21% of yearly income for the poorest half of America but only 7% of yearly income for the 1%. After seeing a drop, we need to be bringing in more tax revenue to maintain landmarks and historical buildings and music and art programs for the school. Soon, there is going to be an unimaginable amount of money being passed on to another generation, and would it be wise not to tax them on any of that money. Many of these people do work for a living but are they as productive as teachers, doctors, and other vital occupations that keep America moving. This is an issue that needs to be addressed sooner rather than later.

References

  1. Buchheit, P. (2011, August 22). Why the Rich Should Pay Higher Taxes. Retrieved from https://www.commondreams.org/views/2011/08/22/why-rich-should-pay-higher-taxes
  2. Elkins, K. (2019, February 14). Bill Gates suggests higher taxes on the rich-the current system is ‘not progressive enough,’ he says. Retrieved from https://www.cnbc.com/2019/02/13/bill-gates-suggests-higher-taxes-on-those-with-great-wealth.html
  3. LoBianco, T., & Wright, D. (2016, October 03). Cuban blasts Trump, and calls paying taxes ‘patriotic’. Retrieved from https://www.cnn.com/2016/10/03/politics/mark-cuban-trump-taxes/index.html
  4. Sahadi, J. (2016, August 18). The richest 10% hold 76% of the wealth. Retrieved from https://money.cnn.com/2016/08/18/pf/wealth-inequality/index.html
  5. Sinclair, N. (2016, April 29). Warren Buffett has a simple explanation for why rich Americans should pay higher taxes. Retrieved from https://finance.yahoo.com/news/warren-buffett-has-a-simple–rational-explanation-for-why-rich-americans-should-pay-higher-taxes-123214184.html
  6. Steverman, B. (2017, September 12). Retrieved from https://www.bloomberg.com/news/features/2017-09-12/why-american-workers-pay-twice-as-much-in-taxes-as-wealthy-investors
  7. Vitelli, A. (2018, March 27). Should we raise taxes on the rich? Retrieved from https://www.theperspective.com/debates/businessandtechnology/raise-taxes-rich/
  8. Why Do You Have To Pay Taxes? (n.d.). Retrieved from https://wonderopolis.org/wonder/why-do-you-have-to-pay-taxes/
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