Real estate magnate Donald Trump once proposed a one-time tax of 14.25 percent o
ID: 1171226 • Letter: R
Question
Real estate magnate Donald Trump once proposed a one-time tax of 14.25 percent on the net wealth of every American with more than $10 million. Would this be an efficient way to raise tax revenue? Why or why not? Real estate magnate Donald Trump once proposed a one-time tax of 14.25 percent on the net wealth of every American with more than $10 million. Would this be an efficient way to raise tax revenue? Why or why not? Real estate magnate Donald Trump once proposed a one-time tax of 14.25 percent on the net wealth of every American with more than $10 million. Would this be an efficient way to raise tax revenue? Why or why not?Explanation / Answer
No, this would not be an efficient way to raise tax revenue. Increasing taxes is not the ideal way of increasing tax revenues. Federal govt. should instead try to increase the number of tax payers by improving the system and infrastructure so that taxpayers cannot escape from paying taxes.
In this case, Trump proposed that only the top 1% of the people would pay the taxes and the rest 99% would get reductions in federal income taxes. So, ultimately you are increasing tax rate at one end and reducing it at the other.
The idea is impractical too. Not all rich Americans would have their wealth in the form of cash. And hence, would not have the cash to pay the tax because their wealth is tied up in investments such as real estate.
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