The level of public debt has been increasing significantly in the USA. The US fe

Question

The level of public debt has been increasing significantly in the USA. The US federal and state governments are planning to increase taxes to finance their debt expenses (principal payments plus interest payments). Some economists argue that the rich should pay higher taxes since they earn more. Others claim that the rich invest their money and create jobs; a higher tax burden on them would lower investments and job creation; thus the middle class should pay higher taxes, but not the rich. Which view do you support? Why? Please use at least one reference**

Explanation / Answer

The rise in the level of public debt shows that the government would tend to increase the income tax so that they could generate funds to do spendings for the welfare of the society. There must be tax payment to be made by Rich class people. The category to pay high taxes should include corporate companies and manufacturing industres working in the USA. As per the survey conducted in the year 2015, a total of $343.8 billion has been collected from the income tax paid by corporate companies. It shows the rise in overall revenues on annual basis that has led to incur such a huge amount of tax by the govenment. The rise in globalisation has increased the business level taking place in the international market on a long run. It is the duty of the corporate sectors to pay from the revenues earned to the government so that the fund could be used for the welfare of the society. On the other hand, if middle class families are levied with high taxes then it would be difficult for them to have a standard living. The economy of the country is made good for the betterment of the society. In case of debts, the consumption per capita decreases drastically. It shows decline in the GDP of the nation affected by tax incured by the middle class families. The rich people earn from the business so much on a long term basis that they could benefit the country by increasing their tax in case of increasing public debt in the country, It would help to increase the spendings by the government so that there is rise in the social and economic factors and development taking place in the country. The economy raises as the GDP increases of the nation. The increase in income tax of middle class working person is going to increase the spendings of people which would tend to limit their spendings. It would slow down the market due to lack of demand and supply of the product. When the government of a country faces large public debt it shows slow down in the economy. It means that the salaries of the employees decreases and hence the economy faces difficult times. In such a case, the income tax of rich people running big corporates and industries who earn large revneus on a long term basis would help the government ot increase their spendings on social issues and uplifting the society.

Reference:

http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

http://www.immihelp.com/newcomer/income-tax-usa.html

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