Should The Uk Government Restore The 50 % Additional Rate Of Income Tax?

While most taxpayers agree that tax reform is necessary for our country the problem they encounter is the difficulty they experience when trying to understand all the political terms used when discussing tax reform. This paper is an attempt to help the taxpayers of our country to better understand the political terminology and gain knowledge about some of the proposals that have been explored.

However, there are also some drawbacks associated with raising taxes. Tax is a form of leakage from the circular flow of income leading to negative multiplier effect. If the government increases income tax rates, it might create disincentives to work. It is because when income tax increases, the opportunity cost for leisure time decreases; and people will have to work longer

The resulting change equates to roughly 500K increase in pre-tax income. The allowance would have been $8,531,577.60 if they had kept the same ratio from 2003 in 2004.

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

However, these long and short term economic improvements are only what is predicted to happen and there negatives to the reduction in income tax. A factor that the government must take into account is the budget deficit, can the government afford to simply cut income tax that is a large source of revenue for the budget. A worsened budget deficit could have devastating impacts upon the economy, for example less people able to have the benefits they require, (this would also reduce demand in the economy as those on benefits generally spend the money they have as they do not have spare to save, this may damage the economy even further) or a reduction in money towards health care. Also, a reduction in income tax does not necessarily mean

Whilst William McBride, chief economist for Tax Foundation website, sided with tax cut policy saying that to strengthen the financial state, “we should lower taxes on the earnings of capital,” “workers and the businesses that hire them,” Chye-ching Huang and Nathaniel Frentz, both are senior Tax Policy analysts, completely debunked the evidence McBride provided to support his argument, which includes the review of twenty-three among twenty-six studies he thought to advocate the idea. Indeed, as one conducts research, regardless of what sources it comes from, agreement over tax issue should never be found as a unanimous answer. One of the reasons why it is so difficult to reach a definite conclusion rests on the fact that although some statistics may show economic growth was in step with tax cut, correlation does not mean causation: just as ice-cream sale and murder rate increase during summer time, it is baseless to assume that higher ice-cream consumption leads to higher odds for crime. Moreover, because there is a great amount of research has been done on taxes, different interpretations from these data are understandable. Before concluding that “nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal” finds cutting taxes improves the financial status quo, thus, people need to consider

The tax policy in the United States is very confusing. When the tax policy was originally written in 1913 it was four hundred pages. Now, over the past ninety one years, that tax policy has evolved to over 72,000 pages. Since the tax code has become so lengthy and nearly impossible to understand, the topic of tax reform has been in the minds of many. Although, most barely think about tax reform until tax season. It is a controversial subject due to the impact a change in tax code would have on the American people. The two most popular and widely known stakeholders in this debate are the two major political parties in the United States, the Democrats and the Republicans. The two parties share absolutely no common ground on the subject of

a greater percent in taxes and tax revenue rather than just shoveling the money into things such as

rate, in periods of higher income tax the GDP sees an increase thus proving that higher taxes do not create a drag in the economy. When the top marginal tax rate is at a 75 to 80 there is an about 4.6 GDP growth creating this “Sweet-spot”.

With the presidential elections coming up, different tax policies are being debated between the candidates. Whether it is proposed by a Democratic or a Republican presidential candidate, there have been many possible solutions presented on how to reform the current tax code. Focusing specifically on four candidates, two from the Democratic Party, and two from the Republican Party, I will compare and contrast their respective tax proposals. While the Democratic candidates generally agree with President Obama’s current tax code, all four candidates are looking to reform it in some way in order to, in their own eyes, better the current tax code affecting today’s citizens.

Our current income tax system today is very complex, unfair, inhibits saving, investment and job creation, imposes a heavy burden on families, and weakens the integrity of the democratic process. It can't be fixed and must be replaced. The U.S. income tax code is a long and complex system. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year. The administrative costs of the tax system far exceed those borne directly by the IRS. Each year Americans devote 5.4 billion hours complying with the tax code, which is more time than it takes to build every car, truck, and van produced in the U.S.

The government of Australia highly impacts the economic inequality in Australia with doing things such as bringing in polices and aiming the budget at certain demographics. After the highly anticipated budget release of 2016, the government told Australians of the major budget measures that were going to affect them. This included a raise of the tax bracket for middle income earners, redefining it as $87,000 rather than the current $80,000. Currently, the bracket is for those who earn $37,001 - $80,000. “Tax

May be if our politicians, thought like this today we would have much less problem. While some may argue that most agree to raise the tax and in doing so punish those they feel badly towards, this is why we have courts and law bodies to prevent rule by popular demand. The rule of mass groups of people is not how our democracy works. When taxes are raised the gap between gross and net pay widens thus as time proven, makes the person slave less and put less aside, because the government already took some of their earnings. Pulling tax from the rich undermines the employed, when taxed, the rich will simply tax the employed, lessening wages. Raising taxes is a failed government strategy. For example, during the holocaust people in most of Germany supported the tyrant Hitler and his regime, though of course it was a horrid and wrong thing to do. Taxes should and cannot be raised for the

The UK taxation system subjects individuals’ incomes, including interest on savings, pensions, and salaries to income tax on the basis of ‘bands’ – the first £ 9,440 (which recently rose to £ 10,000) is exempt from taxation, with any income between this limit and £32,010 attracting a basic rate of 20%, that between £32,011 and £ 150,000 attracting a tax rate 40%, and anything in excess of £150,000 attracting a rate of 45% (BBC, 2014). Prior to April 2013, earnings exceeding £150,000 were taxed at a rate of 50% - the 5p rate of income tax - such that a person earning £200,000 would be taxed at 40% for the first £150,000 and an additional £25,000 for the extra £50,000, as opposed to the £22,500 they would pay under the current 45% rate. The government’s decision to reduce the high-band rate from 50% to 45% in April last year was aimed at stimulating economic growth and facilitating the process of recovery. The Labor Party’s plan is geared towards facilitating income redistribution by raising the high-band rate of income taxation from the current 45% to the original 50%.

In addition to economic issues, taxation is also a political issue. Political leaders formulate tax policies to bring reforms in the taxation system in order to promote their agendas. The major tax reforms include: increasing or decreasing the tax rate, imposing new taxes on certain products and changing the definition of taxable income. It is evident from the research studies that no one deliberately wants to pay taxes. U.S’ tax policy reflects expression of influence - i.e., those who have power are successful in paying low taxes and their burden is shifted to people who have no power. Therefore retired individuals, small business owners and farmers find ways efforts to reduce their tax burden. Since its existence, tax policy has been enormously used for promoting political and economic agendas.