Federal Income Taxes

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Federal Income Taxes Should Be More Progressive

Federal Income Taxes Should Be More Progressive


Taxes are compulsory charges on people and companies have to pay to finance the state. In short: no state taxes would not work, since no funds available to finance the construction of infrastructure (roads, ports, airports, electrical), provide public health services, education, defense, social protection systems (unemployment, disability benefits or accidents, etc.). This paper provides a general view of taxation system in United States, and argues that federal income tax services should be more progressive.


Tax purposes: the application of a tax to meet a public need indirectly. That is, tax revenues and proceeds from the fund (money) apply in expenses to fund various public services.

Non-fiscal purposes: the application of a tax to meet a public need or public interest directly. The classic example is the tax on cigarettes and alcoholic beverages.

Mixed purposes: the purpose of joint pursuit of the above two purposes.

A progressive tax is a tax whose rate increases with the value of the item taxed, called tax base or tax base. In other words, the higher the value of the item that is subject to tax, the greater the rate applied to this value to calculate the tax will be important (Kirchler 2007). For example, an annual income of $ 20,000 is taxed at 10% and an annual income of $ 30 000 to 15%.

The basic idea of progressivity is based on the notion that tax does not destroy the economic potential of the taxpayer. Government must be careful not to raise the revenue necessary to meet basic needs (housing or food for a household, pay suppliers and employees for a company). It is logical to demand little or no tax on the lowest incomes and, therefore, more to the richest (Seidman 1997).

The question here is not the amount charged on the tax but the value that is associated with that amount, that is to say the well-being would have made the goods purchased through this money. According to the marginalist theory, the ability to pay is expected to grow faster than income. In economics, the marginal utility of a good or service, is the utility that an economic agent will derive from the use of an additional quantity of that good or service. This decreases the quantity of goods already consumed.

The main argument against the principle of marginal utility to income tax is that it compares the relative utilities for a given person. For opponents of the theory of cardinal utility, the value assigned to the thing taxed is rather variable from one individual to another. For example, imagine two colleagues who have different occupations outside work: the first is busy with an activity that does not require large expenditures, and it can even save money, such as gardening, while the second is a skydiving enthusiast, a hobby which he can indulge from time to time because the jumps are expensive. Suppose the first chooses to work part time in order to ...
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