Taxes on the Wealthy: Is it beneficial to raise them?

tax-economics-pictureMargaret O’Rourke – Period 7 Honorbound

A major topic in the current 2016 presidential election is raising the taxes on the wealthy to be able to lower taxes for the middle and lower classes, but would this plan boost Gross Domestic Product and overall be beneficial to the American economy?

Specifically, democratic candidate Hillary Clinton has intentions to raise taxes on the wealthiest people in America to use for additional government spending. Three fourths of the taxes would come directly from the top 1 percent of wealthiest people.[1] This sounds like it will be beneficial for the middle and lower classes and bad for the wealthy, but overall this is detrimental to our economy. Clinton’s plan calls for many changes in the wealthiest Americans tax plans. For example, she will raise the taxes of those who make $5 million or more by an additional 4 percent.[2] Additionally, the Clinton website states that she would enact “the Buffett Rule, which ensures that millionaires must pay at least a 30 percent effective rate”.[3]

It is not financially feasible to raise the taxes on the wealthy and decrease government debt. According to the tax foundation, Hillary’s plan to increase taxes on the wealthy “would end up increasing federal tax revenues by $191 billion over the next decade”.[4] Therefore, unless you decrease spending or raise the taxes across the board for all citizens we will continue to increase our deficit.

According to chapter four of Naked Economics by Charles Wheelan raising taxes impacts Americans, because “taxes take money out of our packets, which necessarily diminishes our purchasing power and therefore our utility”.[5] Essentially, the plan to place a higher tax on just the wealthy effects the nation’s Gross Domestic Product. GDP is “the total value of all goods and services produced in an economy”, and “When the headlines proclaim that the economy grew 2.3 percent in a particular year, they are referring to GDP growth”.[6] In the case of Hillary Clinton’s tax plan to increase taxes on the wealthy will cause the economy to decrease by 1 percent over a period of time.[7] The effects of a lowered Gross Domestic Product will cause “0.8 percent lower wages and 311,000 fewer full-time equivalent jobs”.[8] Clinton’s basic plan sounds a lot better in interviews or debates rather than how it reads on paper. When the different pieces are economically broken down people are able track the effects it will have on our current economy.

Overall, if taxes are increased solely on wealthy Americans, our country will be in even more debt, and there will be less money for everyone to spend causing GDP to fall even more rapidly. As a result income will decrease, and so will the amount of jobs available. Keeping the economy from any additional falter means creating a fair tax plan for all American incomes.

[1] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[2] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[3] “Investing in America by Restoring Basic Fairness to Our …” Hillary Clinton 2016: Hillary for America. Accessed October 20, 2016. https://www.hillaryclinton.com/briefing/factsheets/2016/01/12/investing-in-america-by-restoring-basic-fairness-to-our-tax-code/.

[4] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[5] Wheelan, Charles. “Chapter 4 Government and the Economy II.” In Naked Economics: Undressing the Dismal Science, 94. New York City, New York: W.W. Norton & Company, 2010.

[6] Wheelan, Charles. “Chapter 9 Keeping Score.” In Naked Economics: Undressing the Dismal Science, 193. New York City, New York: W.W. Norton & Company, 2010.

[7] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[8] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

Photograph: “Apple’s 10-K Filing Warns EU Ruling Could Significantly …” Accessed October 20, 2016. http://www.patentlyapple.com/patently-apple/2014/10/apples-10-k-filing-warns-eu-ruling-could-significantly-increase-apples-taxes-and-more.html.

[1] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[2] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[3] “Investing in America by Restoring Basic Fairness to Our …” Hillary Clinton 2016: Hillary for America. Accessed October 20, 2016. https://www.hillaryclinton.com/briefing/factsheets/2016/01/12/investing-in-america-by-restoring-basic-fairness-to-our-tax-code/.

[4] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[5] Wheelan, Charles. “Chapter 4 Government and the Economy II.” In Naked Economics: Undressing the Dismal Science, 94. New York City, New York: W.W. Norton & Company, 2010.

[6] Wheelan, Charles. “Chapter 9 Keeping Score.” In Naked Economics: Undressing the Dismal Science, 193. New York City, New York: W.W. Norton & Company, 2010.

[7] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

[8] Pomerleau, Kyle, and Michael Schuyler. “Details and Analysis FISCAL of Hillary Clinton’s Tax …” Accessed October 18, 2016. http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf.

Photograph: “Apple’s 10-K Filing Warns EU Ruling Could Significantly …” Accessed October 20, 2016. http://www.patentlyapple.com/patently-apple/2014/10/apples-10-k-filing-warns-eu-ruling-could-significantly-increase-apples-taxes-and-more.html.

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