Question

I am composing a research paper on the pros and cons of increasing taxation for the wealthy, and need a few ideas as to the main points I can discuss. The majority of my main points are broad macroeconic type ideas, however, I need to incorporate microeconmic concepts into the paper. Any suggestions to begin some brainstorming would be very helpful. Thank you very much!

Answer 1

The various macroeconomic concept that ypu may want to discuss are:

1) impact on the income inequality which tends to decrease with increased taxation of the wealthy.

2) the productivity of the economy may go up with the increase in governmnet revenue and thus increased ability to demand.

3) there may be increased growth prospects in the economy due to increased demand from the G component of Aggregate demand schedule.

4) employment effects in the economy.

Microeconomic effects:

1) reduced or increased labour supply depending on whether the income effect of such a taxtion is greather than the substitution effect.

2) reduced demand from the wealthy people due to reduced wealth.

3) increased effeciency of the resources from the redistribution of the wealth throgh taxation.