Should the rich pay more taxes? There has been an online debate about whether rich people should pay more taxes. As economic problems continue to intensify, the more the debate goes on. Taxes have benefits and cons to the economy. Some of the benefits are that they help to raise government revenue and lead to the redistribution of wealth. The disadvantages include people having less money to spend and large companies and individuals trying to avoid taxes.
In this article, we will look at taxing the rich pros and cons and determine if the rich should pay more taxes.
Why Tax the Rich Pros and Cons?
There are pros and cons of raising taxes on the rich. Some of the benefits include:
1. Raise Revenue for the Government
The government needs to raise revenue to offer essential services to its citizens. One of the sources where the government can raise revenue is by taxing the rich more. By taxing the rich more, the government can get the funds to offer services like defense, health, and education.
2. Redistribution of Wealth
Taxing the rich more has a moral ground in that it helps in wealth redistribution. Money is collected from the super-rich and redistributed to the poor by offering them services and essentials like health and education.
3. Avoid Wealth Disparity Between the Rich and Poor
The other reason why the rich should be taxed more is to ensure the gap between the rich and the poor is not too large. When there is a huge wealth discrepancy between the rich and the poor, it leads to social instability. The rates of crime get high as the poor are trying to enrich themselves by stealing.
4. Economic Growth
Wealth tax leads to high economic growth in a country. This is evident in countries like Australia, Sweden, and Canada that use wealth tax to raise government revenue. More revenues can be raised through wealth tax. When a wealth tax is introduced, other forms of taxes can be reduced, leading to economic growth.
Read also: List of tax have countries in the world.
Why the Rich Shouldn’t Pay More Taxes
1. A Lot of Pilferage
Governments waste a lot of money they collect on unproductive projects. It doesn’t make sense to collect money from the rich and then it is misused by government institutions. Collecting more money from the rich will make the governments have more money to waste.
2. Market Stagnation
The other reason why the rich shouldn’t be taxed high is that there is evidence that when taxes are high, there is a slow economy that leads to market stagnation. Also, high taxes demotivate people from working hard. This leads to less labour since people are demotivated to work hard and get taxed highly.
3. Leads to Social Divisions
Taxing the rich people highly leads to a class war situation between the rich and the poor. The rich begin to resent the poor and middle class since they feel they are taxed high and money redirected to them.
4. Lower Investments
High taxes lead to low investments since the rich don’t have lots of free cash to put into investments. Consequently, there are few businesses and unemployment rates go high. In return, the rates of return tend to go down significantly, and hence, no economic growth.
Summary: Should the Rich Pay More Taxes Pros and Cons
The above are pros and cons of taxing the rich. Although taxing the rich more leads to wealth redistribution and raises revenues for the government, there should be a balance. It is because it can lead to lower investments, unemployed, and a demotivated labor force. Besides, the government should address the high pilferage in its institutions so that collected taxes are put to the best use.