What I have found surprising about taxation.

HL Economics

8/31/09

Scion

After completing lesson 4 activity 59 to 60 on microeconomics, I was shocked to find out that what I believed to be the fairest taxation sytsem specifically “proportional” was not. Before the lesson I though that sales tax was proportional, since it was fixed; meaning that everyone pays the same amount (ex. Japan’s sales tax is 5%). However,  once we use real wages to calculate the actual tax rates each individual needs to pay, the tax percentages for the poorer people became higher then the more wealthier people. This occurs since poorer people have to spend a larger portion of their total income on necessities  then more wealthier people which result into a regressive taxation system. I feel like the gap between the rich and poor has no end to it.

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~ by scioneconblog on August 30, 2009.

One Response to “What I have found surprising about taxation.”

  1. That’s the problem with our current economic ideology. While people should make what they are worth, having 2 percent of the population (the last to lose their jobs as Executives) making 50% of the total income in this country, it creates a clot, removing money from the eoonomy, and held by people who have no need to spend it. It’s interesting, because America is setup in such a way, that labor and production seems to be valued below it’s worth, causing fewer people working. I think we should prevent non-labor employment from getting millions for their lack of contribution to society. It has gotten out of hand. If we stopped paying a higher wage for higher education, and provided free education to anyone who wants it, then Greed wouldn’t be so destructive, and powerful.

    Interesting point about the Tax for US (16th Amendment) is that when they sent it to the states to be ratified, it came with a sample tax form. People who made less than $4,000 (Equiv about $40-50k) was exempt, as “Income” at the time, referred to the money you made above and beyond your normal expenses.

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