Question

Wealth Inequality is a Controversial Subject: so on this discussion board voice your opinion on the following issues:

1. Should the richest Americans be taxed on their wealth?

2. Rich Americans have already paid income tax on the earnings that made them rich in the first place. Isn’t taxing wealth double taxation?

3. Should wealthy American taxpayers pay inheritance and gift taxes in order to give their money to their family?

4. Keep in mind that you don’t have to die to have to pay inheritance and gift taxes under the current tax code. Anyone who gives a family member more than $5 million is subject to the tax. Is that amount too high or too low, and why?

Answer 1

Part 1)

Tax has indeed been a controversial topic in the United States especially for the rich and elite section of people on how much they must be charged for. However, in the view of numerous economists, the best way of reducing income inequality in the country is to allow for the rich to pay higher taxes.

The income inequality in the United States which refers to the difference in income between the rich and the poor has been rising steadily over the years. So much so, that the minimum wages on an average is between 7-10$ in most states across the country while the rich may spend this in a second.

Thus, due to the enormous wealth which the rich in the country hold, and their ability to show most spending as an expenditure for business and not be taxed upon the same, it is correctly advocated that the rich should indeed pay taxes in the country. \

This would allow for the government of the United States to have sufficient money to spend on schemes for the social upliftment of the needy as well as for various economic growth measures such as infrastructural development, healthcare and nutrition etc which will help the economy in remaining stable in the long term.

Disallowing, taxes to be paid by the rich only helps in increasing the gap between the rich and the poor which is not good for any society at large.

Part 2)

The reason why corporate taxes and individual taxes are kept different are because they are thought of as different entities. As a rich person, if you are not liable for the debts which a company needs to pay, then you must be accountable for the profits which you make from holding shares of a company.

A company’s revenue is different from the owners and this is true for the United States and most other economies across the globe.

This very concept wherein a company is different from its owners and has a unique identity then means that liabilities and profits of business and its owners are concerned is different and must be taxed differently. This helps in ensuring that those that are earning sufficient revenue contribute towards national development as well.

Part 3 & 4)

As described in the case study itself, inheritance tax is charged up and over transfers of 5 Million dollars which in the United States and beyond is a huge sum of money. There are millions of people earning meagre wages who earn barely sufficient enough to be able to provide for the family and yet many others remain homeless in the country as well.

Inheritance in a situation wherein no taxes are levied would mean that the rich pass on their money without any charges to future generation who further get richer by investing that money, whereas the poor continue to remain poor and the income inequality in the country remains high which is bad as per the context described in the sections above.

Conclusion: -

Tax collections are an important source of revenue for a country which is charged from the rich as well as the middle class in varying proportions so as to ensure common good for all and rapid infrastructural development and expenditure into healthcare, education, and other similar programs which are aimed at helping one another grow, bringing in investments into the country and keeping a healthy economy.

Thus, as the rich make sufficient profits for themselves, they must be allowed to pay taxes which are much higher than other. Its aim is to reduce inequality in the country and ensure that all people live in a healthy economy which helps consumers demand more on one hand and suppliers can make higher profits on the other.

We must thus allow for smooth collection of inheritance tax as well as those on the rich and companies and its owners should be taxed differently to allow for the concept of different identities among them to prevail.

Please feel free to ask your doubts in the comments section if any.