Question

In: Economics

Q4 What arguments can be offered that it is better to tax wage income than corporate...

Q4

What arguments can be offered that it is better to tax wage income than corporate profits and capital income more generally?

Solutions

Expert Solution

Explanation:

Every different country has different way and system of tax, some of them tax income more and corporate profits less while some do opposite. Recently we have seen in Canada which is known as tax heaven where corporate profits is taxed lesser than wage income tax and citizens of Canada are opposing that tax system heavily. When it comes to tax wage income there should be slabs where individual who receive higher wage should be taxed more and corporate profits which should be taxed accordingly so that tax burden won’t be on people are depended on wage income.

As concerned of capital gain this should be taxed lesser because the sale of asset is not routine like income we receive at the end of month and sale of asset price is also depend on economic condition there could be inflation or depression that could decrease or increase price of asset.

The main point is that wage income should not be tax higher than corporate profits because people might receive lesser income and uneven income. While individual also have to pay for other taxes also and taxing them higher than corporate profit tax is not fair.


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