7/01/2004

A Tax Cut

I found an article which talks about tax burden. The author is really knowledgeable and I learned a lot from it. The article is at, "http://slate.msn.com/id/19280/".

The republicans suggest they should use the federal budget surplus for a tax cut. They are concerned about the increased tax burden borne by the average American. This aricle says, "A typical mother and father who both work paid nearly 40 percent of their income in taxes". To be accurate, "'typical' families pay 36.7 percent of their income in total taxes." this is very high. The goverment taxes in 40 percent of their total income. Also, although most people do not get any capital gains, they pay capital gains taxes. Moreover, it seems that the average taxpayer pays an average share of estate. However, it says, "the estate tax only affects inheritances of at least $625,000".

What most people pay capital gains taxes made me so surprised because this situation does not apply to the benefit principle of taxation. They do not have any capital gains, which means they do not receive the benefit of capital gains, so they do not have to pay the tax. On the other hand, in some situations, we need to pay taxes. Some examples of the benefit of taxation, as we learned in class, are "provide a stable set of institutions and rules", "promote effective and workable competition". Those really make sense to me. Many people do not hesitate to pay taxes if their taxes promote their society. The goverment needs to show its budget. So far I agree with a tax cut. It is too unfair for the average people. As republican said, they should use the federal buget surplus for a tax cut.

2 comments:

Dr. Tufte said...

See my comments to the post entitled "How Much Is Enough".

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