Why Raising Taxes on Wealth Makes Sense

Posted on March 28, 2022

Why Raising Taxes on Wealth Makes Sense

There are some that argue the rich are being targeted for taxes just because of their financial success. The counterargument is that increasing tax rates on the rich is justified because the wealthy’s income has grown at a faster rate than of any other class. According to statistics, the majority of America’s wealth has shifted to the top 1 percent, who now earns 20 percent of the income. In 1980, it was 10 percent.

For the past 40 years wages have stagnated or fallen, and work hours have increased. This ground alone is the reason why Republicans and Democrats are against raising taxes across the board.

Even as President Obama proposed an increase in tax rates for the top 2 percent of the taxpayers, only the top 1 percent of taxpayers would end up paying higher taxes. According to Citizens for Tax Justice, a non-profit research and advocacy group focusing on federal, state and local tax policies, about 77 percent of families with an income of $300,000 to $350,000 would face a tax increase.

It was argued that an increase in tax rates would affect economic growth because the rich would cut down on expenses and investment. However, the effect of higher taxes on the rich has not been less spending. According to a poll, those making $500,000 or more said increased taxes have not affected their spending, investment, or charitable donations.

More than 60 percent of those making $250,000 or more said that increased taxes have not affected their investment. Raising taxes on the wealthy might not have affected their spending or financial plans, but any more increases, as President Obama has suggested, just may. 50 percent of those making $500,000, and 56 percent of those making $250,000, said that their spending would be hurt by any further tax increases.

The belief that raising taxes on the rich would impact spending the first time has proved to be wrong till now. The indication of further increase affecting spending has equal chances of being false.

Raising a dollar or two across the board can also lead to significant increase in revenue without hurting taxpayers. Business owners are optimistic about the future growth of the economy. With the economy already on the way to recovery, more taxpayers are hopeful about the economy.