Progressive Tax for the Economy

Progressive Tax

Economists worry that the idea of raising taxes for the wealthy may elicit a heated debate. The question “Is it a fair thing to do?” resonates across many people’s minds. Economists all over the world agree that redistribution of wealth in a bid to make societies more equal is likely to lower economic growth. The more an individual earns, the higher the tax that will be deducted from his or her wealth. Moreover, such individuals will be left with a relatively smaller amount of money or wealth, for that matter, to invest in ventures that would have created wealth. What is more, should they consider investing in capital ventures such as real estates and conglomerates, it is highly imperative that the taxes on these investments will be higher. In the long run, taxes would have been distributed, but who will have benefited?

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Certainly, a poor man will not be considered either. It is simple: most economists and financial analysts agree that this is more of a give-and-take affair. The “big tradeoff” occurs between efficiency and equality. This notion is also supported by comparisons between socialist and capital countries. There should be a limit on the amount of redistribution that a society can be allowed to pursue. The limit will help dictate the amount of tax that should be levied on the wealth of the rich so that they are discouraged to invest. In other words, it is as if the rich are denied a chance to invest and are punished for being rich (Blum & Kalven, 2008). In a review conducted by economists and financial analysts drawn from the best financial institutes across the globe, a conclusion was reached that whereas redistribution of wealth in form of progressive taxation is commendable, it should ensure that the relevant authorities come up with a formula that will make wealth equitability more transparent and that everyone will be fairly taxed. Less output in the tradeoff will shift tolerance levels south, or simply put, equality will be more intolerable.

Justification of Bush Tax Cut

Following a huge debate and controversy that hit the headlines, at long last, based on impressive arguments and counterarguments, a justification on the Bush Tax Cut was finally made. However, the claim by financial analysts and experts that equity of finance and wealth for that matter overshadows efficiency in decisions involving tax policies is one that still casts doubt on the overall success of the Bush Cut Tax (Seligman, 2005). If taxes were to be lowered, output would go up and this would lead to a situation where everyone would gain. Additionally, all the obstacles and barriers to investments would be eliminated. Again, following the passage of the bill, the lowest ends of the income redistribution within major economy brackets would fare even better. Of course, this would demand that a redistributive policy be enacted to look at the finer details of the said policy.  

After the tax cuts, economy grew significantly. Jobs were created. This is evidence enough that tax cuts will always favor the overall economy. There were large increases in output growth. The productivity of the workers rose, although the wages remained flat. Obviously, taxing the high-end segment of a population has nothing to do with the growth in economy. If anything, taxing the wealthy more is a form of exploitation. Most financial analysts and economists agree that the surest way to maintain a steady flow of cash within societal and financial systems would involve enacting measures that ensure that taxation is well distributed based on reliable tenets and financial policies.

Income Distribution and Productivity

Income distribution cannot be connected to productivity. Most people would argue that high income earners deserve whatever they have earned. They may even argue that they have worked hard to acquire the wealth they have. However, these suppositions are not always true. There is reliable evidence, following intensive research and scrutiny of pay slips of top company CEOs and business leaders, that what they earn is too large and cannot be compared to what they give back to the society (Seligman, 2005). One thing can be deduced from these suppositions: that they do not contribute a significant margin to developmental projects. Even without financial crises, one thing is certain – taxing this group of society can really ruin the economy.


Based on the material evidence discussed, the researches carried out and the financial analyses looked at as well as the expert opinions on the subject, there is no substantial proof that progressive taxation benefits the economy. If anything, it hurts the economy, reduces job availability and discourages investment.

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