Recently, American citizens have witnessed a tendency of rising taxes (Blodget 1). This issue of rising taxes seems to have gained momentum, especially after the financial recession of 2008. Today, many Americans are concerned about the increasing tax levels.
The issue of huge taxes can be associated with the reason as to why many people in USA are currently struggling in their daily lives, as they try to make use of decreasing disposable income. If one was to interview many Americans on the issue of taxes, there are high chances the response would be ingrained in the overall perception of how huge the tax problem is inflicting on Americans.
A random survey of major USA households will likely reveal that a large number of people cannot afford basic needs; many people are loosing their homes because of taxes; and many people have accumulated huge debts as a result of high taxes. On overall, the spirit of entrepreneurship among Americans seems to be stifled by the ever-increasing taxes, and this makes it hard for many people to succeed in business.
As it stands today, the issue of rising taxes is a problem that should not be given a blind eye (Blodget 1). There is need to enact changes that will result into change of the tax system and be more accommodative and less cruel to majority of Americans. This problem cannot be ignored, given its medium and long-term repercussions. The future of many Americans may be compromised, become bleak, and largely intolerable if the current tax system is not reformed appropriately.
Increased taxes are perceived to be detrimental to the growth of economy in the sense that, increased taxes on income discourage majority of people from working, more so due to the fact that, they work a lot, pay much in taxes, and remain with little (Cohn 1). At the same time, as taxes paid by major manufacturers and industries increase, there is subsequent tendency to transfer the increased tax to basic commodities, a fact that discourages people from buying the commodities.
This operates in a cyclic form, where increased taxes affect industries, and when industries feel the pinch, they pass the ball to consumers; when consumers find it impossible to cope up with the high prices of commodities, they reduce their purchasing power and when this happens, the larger economy becomes a victim, as it stifles and underperforms.
However, as the issue of taxes draws reactions and far-fetch cry for reduction of taxes, another school of thought believes that reduction of taxes will generate numerous negative impacts to the American society. The line of argument on which this school bases its argument is that, taxes are needed to propel social welfare, and when taxes are reduced, then the society is likely to suffer (Cohn 1). Reduction of taxes will compromise the future generation, as many will have a difficult society to live, and they cannot afford basic social essentials.
Further, reduction in taxes will result into massive government budget cuts with regard to essential government programs such as the Medicare and Social Security, and this will be dangerous to the American society (Cohn 1). Therefore, the issue of enacting reforms to reduce taxes to manageable levels for majority of Americans is considered not to be the best option by this school of thought.
There are numerous avenues through which this issue of high taxes can be tackled and bring relief to majority of Americans. For instance, as the situation stands, many businesses are either crumbling or failing to be established, and in some instances, majority of American investors are relocating to ‘friendlier’ areas, thus, denying Americans employment opportunities.
As this happens, the rich remains the biggest financiers of bloated government programs, and, as this trend continues and persists, there is possibility for the wealthy class to shrink in America and, subsequently, wealth creation will be avoided and hence crumbling majority of government programs.
The most important thing for the government is to open the door for a business-friendly policy that largely encourages investment and wealth creation. Such a policy should determine how taxes for various business groups should be applied on relatively accommodative tax reforms.
When this happens, numerous companies willing to leave the industries will be enticed to stay and participate in wealth creation. The establishment of more indigenous industries will provide employment for many Americans, enabling the middle class to possess more income and able to pay taxes.
What the government will do is that instead of concentrating high taxes on a particular segment of population, tax prospects will be spread across a wide group making it possible to reduce taxes as more people become eligible to pay taxes. This approach should be accompanied by reasonable government spending restraints to be more effective. Indeed, this will largely reduce the deficit and enable the economy to recover.
Another area that needs redress in order to spur growth of employment and subsequent reduction in individual taxes is the American property industry. The overall observation that has been made is that it is another area where taxes have skyrocketed pushing investors and potential investors outside the key areas of USA (Tuttle 1).
As many investors leave the country, unemployment rate gradually increases while at same time, wealthy and rich people’s contribution to tax reduces. It should also be known that American economy thrives on small businesses, which are the greatest contributors to national tax kitty.
Therefore, when property industry becomes expensive, majority of these small businesses opt to relocate or reduce their trading activities (Tuttle 1). When this happens, the impact is huge, and evident in key aspects such as reduction of employment opportunities, increase in number of unemployment benefits, and little contribution to national tax kitty. Therefore, it is just prudent for effective and efficient property tax reforms to be enacted.
The issue of raising tax for the rich and middle class population remains emotive among different spheres of population; however, the denominator of all these is that, a rise in taxes creates an immense burden to larger American society.
The society cannot progress at an accelerated speed if high taxes persist, as this tends to push investors and rich people to other regions. As investors move, the middle class employment opportunities reduce, while at same time burdening the social welfare programs for the unemployed people due to reduced taxes.
Therefore, given the immense negative effects high tax are imposing on the nation, there is need for establishment and implementation of a comprehensive tax reform framework that is more business friendly. Indeed, it is only through increased business activities that the economy of the country will grow and distribution of tax pay will be more even and widespread, hence gradually moving down.
Raising taxes will not help especially given the shrinking number of rich people and middle class employees. Instead of just fixing eyes on the tax, it would be advisable if necessary steps were undertaken to stimulate economic growth, reduce government spending, and exploit more energy resources available in the country, which will subsequently contribute to economic growth, hence less taxing from people.
Blodget, Henry. “The truth about taxes: Here’s how high today’s rates really are”. Business Insider, 12 July 2011. 22 October 2011. http://www.businessinsider.com/history-of-tax-rates.
Cohn, Jonathan. “Can we tolerate higher taxes? Heed the Swedish chef.” The New Republican News, 23 March 2011. 22 October 2011. http://www.tnr.com/blog/jonathan-cohn/88856/sweden-denmark-us-high-taxes-welfare.
Tuttle, Brad. “7 Odd solutions for 7 common economic problems”. Times Financial Insight, 08 July 2011. 22 October 2011. http://moneyland.time.com/2011/07/08/odd-solutions-for-7-all-too-common-economic-problems/.