Question

It has been said that nothing in life is guaranteed except for death and taxes. The next questions ask about the three tax structures as well as rate rates.

Question 1) Please state whether you prefer a progressive, regressive, or flat (proportional) tax system and WHY. Is your preference more in accordance with the concept of equality of opportunity or equality of outcome? BE SPECIFIC HERE

Question 2) Please write about marginal tax rates and whether you believe they need to be changed in general. More specifically,

A) If you believe in a flat tax rate system, should income tax rates be raised or lowered?

B) If, however, you think a progressive tax rate is best:

i) should taxes on low-income earners be raised or lowered?

ii) should taxes on average-income earners be raised or lowered?

iii) should taxes on high-income earners be raised or lowered?

C) If, however, you think a regressive tax rate is best:

i) should taxes on low-income earners be raised or lowered?

ii) should taxes on average-income earners be raised or lowered?

iii) should taxes on high-income earners be raised or lowered?

Regardless of which you chose (A, B, or C) be sure to give your reasons WHY you feel the way that you do.

Question 3) Please explain HOW the tax rate changes (the increase or decrease you advocated for in Questions #2 above) will affect each of the following:

    a) economic growth: job creation, investment, incentives to work more, and tax avoidance

    b) the budget: the difference between tax revenue and government spending

    c) economic "fairness"

Your answer needs to have a discussion related to the Laffer Curve, especially with respect to the budget (and to government revenue in particular). In addition, please give your definition of economic “fairness” and WHY you believe that.

Answer 1

( Question 1 ).

I prefer a progressive tax system as it is based on ability to pay principle. In my view burdening equally a very wealthy person earning in billions and a lower middle income person earning meagre amount of money is not ethically right.

My preference is more in accordance with the concept of equality of opportunity.

( Question 2 ).

Marginal tax rate is the rate of tax on each additional unit of income earned. I think marginal tax rates should also be based on ability to pay principle and should be lower for those earning lower income and higher for rich and wealthier people.