Question

Why is the burden of a tax to taxpayers greater than the revenue received by the government?

Should wealthy taxpayers pay more taxes than poor taxpayers?  Defend your argument.

Answer 1

Taxes impose deadweight losses by decreasing the amount of products generated and bought below their effective level; and taxes impose on taxpayers a expensive administrative burden. Some economists advocate taxing consumption rather than earnings because taxing revenue discourages savings. A consumer tax would not distort the saving choices made by people. Wealthy taxpayers should pay more taxes than por taxpayers because:

(1) they are more able to profit from public services; and

(2) they are more able to pay.

During the previous 40 years, income inequality has risen significantly. A easy way of measuring inequality is to look at the proportion of revenue obtained by the individuals with the highest revenue. Using a wide measure that involves revenue from labor, company and capital; public money payments (such as social security); and the value of in-kind advantages from public programs, the Congressional Budget Office finds that the fifth largest-income population saw their share rise from 46% to 55% between 1979 and 2014.