Eng help wk 8
Running Head: MAKING CHANGES TO TAX POLICIES 0
Should Taxes on People Making over $ 250,000 a Year be changed?
May 7, 2017
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Introduction
Over the last few decades, the issue of taxation has been a key issue in the presidency. There have been presidential candidates promising to increase taxes to individuals and businesses, while other have focused on removing taxes in some areas of the economy and for specific income groups (Heim, 2012). One of the key figures in the debate has been $250,000 for couples and $200,000 for singles. The United States government under different administration has proposed different stances on these taxing policies. This paper presents the underlying issues in the taxation provisions made under different administrations. Specifically, the paper presents the details of the debate about taxing those making more than $250,000 annually.
Overview of the Problem
President Bush implemented a policy that exempted tax for married couples earning less than $250,000, and singles making less than $200,000. The following administration led by President Obama wanted to get rid of this policy. Further, the current administration led by President Trump intends to make comprehensive changes to the tax policies used within the country. Although these assertions appear simplistic, making changes to the federal income tax code is complicated. For instance, the tax cuts introduced by President Bush consisted of many reductions including marginal rate reductions, dividend income tax reductions, and capital gains tax rate reductions.
The move to make tax cuts and changes is complicated to complete. It is important to determine the effect that such changes will have, and this is one of the biggest challenges (Heim, 2012). Taxation has a significant impact on the economy. It is almost impossible to make accurate predictions on the future state of the economy, and hence it is virtually impossible to determine the effect of changes in the federal income tax code. As a result, it 's hard to determine whether the taxes of people making over $250,000 should be modified.
Key Problems
Although the final changes have not been agreed on, there is a lot of support for changes to be made to the federal income tax code. In the paper, the main question is whether these changes should be done. As a result, many different challenges would be expected.
Defining $250,000
One of the major challenges that result from the move to introduce tax changes is the definition of the caps. As is in this paper, two of the major figures determining the changes to the tax policies are $250,000/$200,000. President Bush initially made these figures relevant by introducing the tax cuts for married couples earning less than $250,000, and singles earning less than $200,000 annually. However, the value of money does not remain constant, and these figures do not represent the same amount of earning today (Raskolnikov, 2009).
One of the major challenges that currently exist is in determining whether $250,000/$200,000 should be the cut-out as before. As a result of inflation, the same figures used by President Bush and President Obama have now changed to $267,000 for married couples and $213,600 for singles. In determining whether tax changes should be performed, inflation will be one of the primary considerations (Raskolnikov, 2009).
Disposable Income
The debate on taxes has been contentious because of the well-being of taxpayers. According to some scholar, people earning about $250,000 annually pay half of the money in the form of taxes. They have to pay their bills and make a living from the remaining amount. According to some members of Congress, this remaining amount is insufficient for families that may be paying college and mortgage bills (Gemmell, 2012).
In a bid to mind the welfare of American taxpayers, the question on whether to make changes for people making over $250,000 need to consider the disposable income. Changes made to the federal income tax code have a profound impact on disposable income. The amount of money available to individuals has to be adequate to cover acceptable bills such as power bills and school fees. One of the viewpoints taken by those advocating a cut in taxes for those making less than $250,000/$200,000 yearly is that they do not have the means to cover their needs (Gemmell, 2012). As a result, the debate on whether such changes should be made largely depends on determining whether Americans have adequate disposable incomes when such changes are implemented.
Impact on Economy
President Trump has promised a lot of changes to the federal income tax code. However, there has been a lot of resistance from inside, and outside the administration. A lot of the concerns relate to the impact of such changes on the economy. Taxation has been a primary tool used to determine the direction that an economy takes (Heim, 2012). Some industries are afforded tax cuts to facilitate growth, while taxation is used to discourage the growth of certain industries such as the one of tobacco. To plan on making decision on whether changes should be made to tax policies, it is important to determine the impact such changes will have on the economy.
The problem in this instance is that it is almost impossible to make a final estimate. The federal income tax code is very complicated and consists of numerous provisions that must be met (Heim, 2012). For the most part, the impact of such changes has been left up to politicians. It is a debate that is typified by sound support and opposition. Those making a case for the changes put forth convincing evidence that is closely matched by those opposing such changes. It is necessary to gather more information about the effects of making changes to the tax code on the economy.
Conclusion
Making changes to the federal income tax code has been used to stimulate growth in the United States for some time. It has been an issue of interest and concern among those involved as it has great impacts on different sectors. Various government administrations have promised to provide the best tax options to the country, but have faced stiff opposition. The objective of this work was to determine whether it would be an appropriate option to make changes to the tax code.
There are major considerations to be made. One of the major issues was that inflation has a profound impact on the tax policies. As inflation is inherent in the prevailing economic model, the tax policies used to take this into account. Another area of concern is that changes in the tax code have to take account of the amount left for taxpayers. This amount has to be adequate for them to cover all their essentials. Finally, the impacts of these changes on the economy need to be well understood, or there could be undesirable outcomes.
References
Gemmell, N. (2012). Behavioral Responses to Taxpayer Audits: Evidence from Random
Taxpayer Inquiries. National Tax Journal, 65(1), 33-57.
Heim, B. T. (2012). The Effect of Recent Tax Changes on Tax-Preferred Saving Behavior.
National Tax Journal, 65(2), 283-311.
Raskolnikov, A. (2009). Revealing Choices: Using Taxpayer Choice to Target Tax Enforcement.
Columbia Law Review, 109(4), 689-754.
