Unit 8 DB: Should we tax the rich more and give to the poor? Taxes are a primary

Question

Unit 8 DB: Should we tax the rich more and give to the poor?

Taxes are a primary tool for redistributing income from the wealthy to lower income earners. The economic impact of the redistribution of income is a highly debated topic and arguments are generally formed in the Tax Reduction/Increase debates.

The following two sites look at world income distribution and provide a comparison over time

http://www.globalpolicy.org/social-and-economic-policy/global-injustice-and-inequality/inequality-of-wealth-and-income-distribution.html

And:

http://www.imf.org/external/pubs/ft/weo/2007/02/

Data for the U.S. are also available from the Census Bureau at: http://www.census.gov Search for income distribution. From the Heritage Foundation, a conservative think tank, there are two articles that address the impact of tax changes:

http://www.heritage.org/Research/Budget/wm1639.cfm

http://www.heritage.org/Research/Budget/wm1648.cfm

Explanation / Answer

No, this statement is not completely right. We should not say that in order to provide for the gap of income distribution we must tax the rich. In order to properly have a normal distribution, i.e. equal wealth distribution and the variance of income is not very high, we need that we should use a no. of methods, and not only individual taxes. We can actually think of a no. of measures which can assure that wealth distibution is not widely spread. In order to do that, government can provide with more subsidy on Goods and Services to the poor people and at less subsidy to others. Coporation taxes can be increased in order to redistribute the wealth and government with its finance can provide for employment and other benefits for poor people. It is actually a no. of steps and measures which can be taken in order to have an equal distribution of income.

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