A country collects taxes from its citizens in order to raise money for development and growth. The manner in which a country’s revenue authority collects taxes varies from one country to another since different policies and constitutions govern tax collection. Have you ever asked yourself, as a tax payer, whether the taxation system in your country is fair? We do not have a fair taxation system in United States, and this can be explained further in the article written by Veronique de Rugy. Veronique de Rugy, an author of the National Review online writes an article about the fairness of the taxation system in United States. The article plays a significant role in analyzing this topic since it provides a research done to the U.S tax payers and shows their views.
Rugy’s article title is “Is our tax system fair? If not, why?” With the present day economic trend in America, taxation has become too extreme. Consumers face extreme effect of taxes and the effect is more towards them than any other group. Rugy argues that taxes given to an individual should depend on the monthly income, irrespective of the type of employment. In addition, employees get a lot of deductions from their salaries leaving little to cater for daily primary needs.
Going by the fact that many people would do anything possible to evade payment of taxes, the federal government is to blame for this. According to Rugy’s article lack of a fair taxation system in U.S has contributed to the poor development due to the fact that the federal tax system is non progressive. In addition, Rugy analyses data collected from World Value Survey on the effect of pay differences between people working on the same group on taxes. The results indicated that most employers take advantage of employees and deduct them a lot of money in the name of payment of taxes. On the other hand, the author points out on the perceptions of fairness in taxes distribution pointing out it’s a matter of lick or opportunity.
There are two key theories that are applicable on this discussion. Firstly, the benefit theory argues that the state should distribute taxes according to benefits conferred by individuals. The federal state fails in following the theory because there are cases where people with a lower salary levels pay more taxes than other with much higher salary levels. Secondly, the ability to pay theory argues on equity and justice on tax payers. The theory suggests that citizens should pay taxes in accordance to their ability to pay. On the article, the research indicated that most people, especially consumers, pay huge taxes beyond their economic efforts (Laramie and Douglas 55-61).
Support evidence #1
In understanding the argument, there is a need to look at the findings from the U.S. federal state taxation system. As Rugy explains, the research by World Values Survey described two secretaries who were working on the same job but earning different salaries. Irrespective of their earnings, the taxation was the same for the both. This is a clear show of how the federal state discriminates people according to races, culture, or gender. As revealed in the benefit theory, taxes should be distributed according to the amount of income an individual earns. The disadvantaged secretary was unfairly treated because she had no luck or opportunity of talking to employers for an increased pay.
On the other hand, people believe in the perceptions on good luck and opportunities explain the aspect of taxes distribution. According to United States Economic review taxes are redistributed on the basis of who knows who in the federal state. Innocent people suffer in the hands of the rich, who earn huge sums of money but pay fewer taxes. In addition, the high level of corruption tends to favor one group more than the other. The differences in taxes are explained in merits, which seem to favor individuals whose names are known by the government agents. The fairness of taxes seems to agree with the rich while the poor never receive any favor at all. Moreover, the federal state imposed huge taxes on primary goods bringing suffering to low earning consumers. The situation has worsened whereby people look for all means possible to evade paying taxes even if it means making a deal with employees (Fair school Funding Coalition).
Support evidence #2
As Veronique de Rugy states “there is much more to say about fairness and so much I don’t know about the issue” (Rugy, 2013). This statement explains how most people only think about the fairness of taxation systems when they work according to their demands. The U.S. president gave a caution about the effects of the current unfair tax system though little has been done to rectify the problem. In reference to the ‘ability to pay’ theory, people are obliged to pay taxes according to the amount of income earned. The taxation system in United States is unfair at because the amount of taxes that an individual pays is not really a product of the total income earned. Moreover, approximately 70% of Americans complain of the unfairness of the taxation code arguing it only benefits the rich. The efforts by the U.S President to raise taxes among the wealthiest Americans were dismissed by the Senate Republicans. The action of the Senate Republicans was a total breach of the code of taxation and was against the wish of the poor who suffer instead.
Rugy argues that only the rich find the taxation system fair because they do not suffer the impact of huge taxations on small incomes. On the other hand, the unfairness of the taxation system is evidenced where the government spends almost 1.3 trillion U.S dollars per year catering for the travels and other functions of state officers. All these money is generated from the poor who pay more taxes than they can afford. In addition, investors own huge sums of money from the taxes paid to the federal state, and most of them are state officers. For example, home owners earning more than $250,000 yearly get an average of $6,000 through claims on mortgage deductions. These taxes are transferred to people who stay in such houses by increasing rents and other maintenance costs.
Some readers might assume the following argument does not hold any support at all. The argument does not support people who do not pay taxes but asks the federal government to look at the taxation system and make it fair to all. Most of the findings conducted in America indicate how people are unhappy about the huge salaries the Members of Parliament and Senators give themselves and do not even pay a single cent as tax. There can be not fairness and justice in the taxation system when a normal citizen taxed more than a half of the total income earned. In addition, the amount of taxes payable depends on the type of income, whether capital interest or any other form. I invite any claim for those who see fairness in U.S. taxation system to elaborate one example where everybody receives equal treatment from the revenue authority.
Sum up conclusion
In support to the article by Rugy, there is no fairness in the U.S taxation system. Following the two theories of taxation, the federal government has not followed especially when it comes to issues of the disadvantaged in the society. The first evidence elaborates clearly how the rich take advantage of their positions in evading huge taxes. In addition, it shows how less concerned the top government officials are even with a command from the President. Secondly, the other evidence describes the relationship between tax payable and total income. A lot of unfairness is found especially for the poor and low income earners who pay more taxes that their total income.
So what conclusion
Many people suffer due to the unfairness found in the taxation systems especially where the government overspends leading to the poor economy. The following argument basically calls for government officials responsible for designing taxation systems to consider normal citizens while distributing taxes. In addition, for the country to grow and develop more efforts should be put on eliminating poverty. With such trend, the country will be made up of beggars not because people do not earn money but because most of the earnings go into taxes. Moreover, unfairness in the taxation system weakens business enterprises, reduces opportunities growth and stagnate the economy. If the taxation system in U.S. could be rectified, citizens would be extremely happy and focus more on nation building.
Fair School Funding Coalation. The most unfair tax structure in America. 2013. Retrieved from:
Laramie, A J., and Douglas M. A dynamic theory of taxation: integrating Kalecki into modern
public finance. Cheltenham, UK: Edward Elgar, 2000. Print
The state of the U.S. economy hearing before the Committee on the Budget, House of
Representatives, One Hundred Twelfth Congress, second session, hearing held in Washington, DC, February 2, 2012.. Washington: U.S. G.P.O., 2012. Print.
Rugy, V. de. “Is Our Tax System Fair? If not, Why?” National Review Online. 2013. Retrieved