The Instigator
Contra
Pro (for)
Winning
6 Points
The Contender
jimtimmy
Con (against)
Losing
3 Points

Progressive Income Tax

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Post Voting Period
The voting period for this debate has ended.
after 3 votes the winner is...
Contra
Voting Style: Open Point System: 7 Point
Started: 2/11/2012 Category: Politics
Updated: 2 years ago Status: Post Voting Period
Viewed: 6,493 times Debate No: 21069
Debate Rounds (3)
Comments (15)
Votes (3)

 

Contra

Pro

This debate is on the progressive tax on individual citizens. I am Pro. The rich should pay more of their share of income than the middle class and poor. You can make moral, economic, or other arguments.

In this debate, I will focus on Pro - Progressive Income Tax that is fair and has no loopholes.

Plus, do not introduce any new arguments in the third round. First round is acceptance.

In my plan, the system would look like this:


Income Tax .................... Applied To
Rate

10%-------------------------Up to $15,000
20%-------------------------Up to $70,000
25%-------------------------Up to $250,000
35%-------------------------Up to $1,000,000
40%-------------------------Up to $1,000,000,000
45%-------------------------$1,000,000,000+


The need for this plan is to get an idea of what the progressive tax rates should be instead of just thrown out there with no justification in this debate. Plus, in this progressive tax many deductions are cut or eliminated, that is why many people have lower rates in my plan instead.

Good luck
jimtimmy

Con

I accept.
Debate Round No. 1
Contra

Pro


The reasons why a progressive income tax is a good idea is because it is:

  • A fair tax system
  • Reduces Income Inequality - Healthier Society
  • Increases Government Revenues
  • Enhances the Economy and Opportunity


C1: A Fair Tax System [1]

The progressive tax is the most fair type of tax system, because it takes into account the purchasing power of an individual after paying taxes. With my sample of rates, the less well off get to keep much of their income. This is economical and fair. Consider the three main economic groups, the poor, middle class, and wealthy.

Poor: This tax system taxes the poor lightly. This leaves the poor with much of their purchasing power. However, since the poor spend much of their income on necessities, they are still able to afford them. Plus, since the poor have a higher propensity to consume, they stimulate the economy.

Middle Class: The tax system taxes them not too heavily either. They can still spend much of their income after taxes, and much of this income is put back into the economy as consumption for necessities and comforts.

Wealthy: The wealthy make much money already. They have the lowest propensity to consume, and therefore do not spend that much of their percentage of money on consumption, but rather they save and invest. The reason that they pay a larger percentage of tax revenues is because they are rich already.

The top 20% of citizens own over 85% of the total net worth of the USA. It isn't inaccurate to also say that the top 1% owns double the net worth of the bottom 80% of Americans. [11] The rich pay more, but they don't pay much more percentage-wise, or pay less [10] than others. So don't complain that they already pay much, they can definitely and morally pay more.

In fact, the top 400 taxpayers last year only payed an average of 18.11% in taxes. This isn't fair. [10]


Analysis:

With a progrssive income tax, economic demand can be stimulated by reducing the tax burden on lower incomes while raising the burden on higher incomes, allowing still more income to be collected, while the rich will not reduce consumption because of their already vast wealth.


C2: Reduces Income Inequality - Healthier Society

The progressive income tax (P.I.T.) reduces income inequality, which has been reported to have a number of societal benefits, such as lower homicide rates at all income levels. [2] With a steeper progressivet tax, income inquality decreases. Plus, Richard G. Wilkinson, an economist, has said that societies with more equal distribution of incomes have better health, fewer social problems such as violence, drug abuse, teenage births, mental illness, obesity, and others, and are more cohesive than ones in which the gap between the rich and poor is greater. [3]


C3: Increases Government Revenues

The progressive tax increases government revenues. The rich pay their fair share, while their purchasing power is still not affected, while the less well-off can spend more in the economy, and stimulate it because of their high consumption rates, which then improves tax revenue, and the higher consumption fuels a stronger, broader prosperity. Tax cuts for the rich does not create jobs, and if it happened to, it would still be in the national interest for more revenue for the government instead. [5]

The rich don't create jobs like the middle class. Companies create jobs, which requires consumption. A progressive tax fuels consumption in multiple ways. With more income, the rich aren't going to create jobs. They just invest and save. This doesn't create jobs. To quote multimillionaire Henry Bloch (co-founder of H&R Block):

(about tax cuts for wealthy creating jobs):

“That’s so baloney,” Bloch said. “Rich people don’t create jobs. Companies create jobs.”…”You probably pay a higher rate than I do… and yet my income is probably many times what yours is,” Bloch said to FOX 4 Reporter Rob Low. [4]


C4: Enhances the Economy and Opportunity



The American taxpayers have paid for our nation's infrastructure. The rich just get rich off of what the previous taxpayers have paid for. They owe the taxpayers of this great nation a great deal, and should be paying it back, by paying their fair share. If they don't, people in the future will not have as much as an opportunity to climb the economic ladder as [the rich today] have. [8]

----Infrastructure Spending

Government spending is an investment. It is your payment to live in a civilized, modern nation. Your taxes, as well as the taxpayers of the past, have paid for the infrastructure that we all -- especially the rich -- use. The highway system, the medical establishment, the communications system, airline system, space program, education system, the Internet, the national defense, consumer protection, public health care possibilities, the GI bill, Social Security and Medicare, the Federal Deposit Insurance Corporation, and all other assets we have come from the wise investments our parents and that we have made.

What is does------The progressive tax system I have laid out in R1 shows the rates Loopholes are ended. All people pay, because we all benefit from this nation's infrastructure. Tax reductions are cut, and some such as the mortgage deduction are lowered, so the lower rates are substituted for some instead.

The Affects of P.I.T.------With higher taxes on the rich, consumption is fueled for the middle and lower classes, improving the economy. Opportunity, coming in the form of a stronger economy and a vibrant infrastructure, is more prevalent. Also, the rich who got rich from the taxpayers pay some of their fair share, will still remaining rich.

Rich Tax Cuts Don't Create Jobs! [4] [5] [6] [7] [11]

The middle-class and the poor, through their consumption, create most jobs. If you give a rich person hundreds of thousands in tax refunds, they will save or invest with it. Companies expand and hire more with more demand, not more supply. [1]


Conclusion:


A progressive tax system improves consumption, fueling the economy. Tax deductions are removed, and higher taxes on the rich are instituted. The higher taxes on the rich improves society in many different ways, including better health and ethical standards. The rich pay their fair share, while remaining rich. The vast American infrastructure is fueled for later generations, and for ourselves, and we, as well as later generations reap the improved economic benefits. It is justifiable, fair, and makes broad prosperity, instead of prosperity for the few, which has created only large deficits and higher debt. [7] It is the better system. It is a modern, moral system. It is fair, proven, and needed. Vote Pro

***Plus, a Flat Tax is regressive, and obviously a regressive tax is regressive. My opponent then supports a bus driver paying more than Bill Gates or some rich guy.


Sources:

[1] http://conceptualmath.org...

[2] http://psych.mcmaster.ca...

[3] UK Hardback edition: The Spirit Level: Why More Equal Societies Almost Always Do Better. London, Allen Lane, 5 March 2009.

[4] http://thinkprogress.org...

[5] http://www.forbes.com...

[6] http://krugman.blogs.nytimes.com...

[7] http://www.addictinginfo.org...

[8] http://www.dailykos.com...-

[9] http://governmentisgood.com...

[10] http://economix.blogs.nytimes.com...

[11] http://www2.ucsc.edu...

jimtimmy

Con

I thank my opponent for this debate.


Fairness


Fairness is a highly subjective topic. Everyone has a different philisophical view of what is "fair". In my view, the progressive tax is unfair. It discriminates against high income earners by taking a larger percentage of their income. I understand, however, that others have a different view of fairness.

The real issue here is whether the government should be taxing based on what the people in government see as "fair" or whether the government should be taxing in a way that maximises the standard of living of the citizenry. I hold that boosting the standard of living of people should be prioritized over tax "fairness".

After all, the people in a country with a higher standard of living are certainly better off than the people in a country with a lower standard of living and a "fairer", according to some people's view, tax system. I hold that a progressive tax system lowers the standard of living for a country.


Economic Impacts of Progressive Taxation


Progressive income taxation has significant negative effects on economic performance. The reason for this is that progressive tax systems have higher marginal tax rates for higher skilled workers, investors, and entrepeuners. These high marginal tax rates discourage these individuals from engaging in productive behavior like working, investing, and taking more risks because the potential reward is reduced.

Progressive tax systems also tax businesses at high rates. This means that successful businesses have less capital to reinvest and expand their businesses. It is extraodinarily important to the operation of the price and wage system that successful businesses have the necessary capital to reinvest in new equipment, higher wages, and new jobs.

My opponent's economic argument for the progressive tax is that lower income people have a higher prospensity to consume. So, a system that taxes the poor more lightly than the rich would allow people to consume more. However, my opponent has the process of economic growth entirely wrong.

Investment, not consumption, drives economic growth. Consumption is the ends of economic growth, not the means. Production and investment are the means. After all, nobody can consume what is not first produced.

If there is no or little investment, there will be no or little productivity gains. Progressive tax systems tax away capital and disincentivize capital investment. This makes it very hard for economies with high progressive taxes to grow.

The empirical evidence also supports the conclusion that progressive taxes hurt economic growth. In 1989, Reinhard Koester and Roger Kormendi looked at data from 63 countries and found that higher marginal tax rates and more progressives tax systems reduce economic growth [1].

This supports the conclusion that progressive tax rates reduce economic growth.


Income Inequality


My opponent claims that progressive taxes reduce income inequality. This may or may not be true. However, income equality is not necessarily a good thing. Most would agree that it is better to be unequally wealthy than equally poor. I have shown above that progressive taxes do decrease the wealth of a nation.

My opponent also cites a book, The Spirit Level, that claims that inequality reduces health and other social indicators. However, this book has been widely criticized for statistical dishonesty. Many of the correlations are found to not even exist when using complete datasets. Likewise, the correlations that do exist appear to be the result of a different thing that simply correlates with inequality [2]. In other words, inequality does not create social problems, but some things that are correlated with inequality, like crime, do.


Revenue

My opponent claims that progressive tax systems increase government revenue. While I do not support increased government revenue, as larger governments do a lot of harm, it is not true that progressive tax systems necessarily mean more revenue.

In fact, a flat tax system would probably bring in more revenue because it would lead to a larger economy with more incomes to tax. Progressive taxes can be low. They also lower economic output which lowers revenue.


Conclusion


I have shown that a progressive tax system is not desirable.



Sources:

[1] http://onlinelibrary.wiley.com...

[2] http://online.wsj.com...














Debate Round No. 2
Contra

Pro

Thank you Jimtimmy for your response.
I will mostly post rebuttals and closing for this round.


A Fair Tax System


The progressive tax is the most fair income tax method. This is because of a few reasons:

1) Improves Standard of Living

Much of this I covered last round. Infrastructure can be invested in on larger scales. Plus, it reduces the income inequality in a nation, which has numerous health benefits for all! [1]


2) Rich gives back to Society that made them rich

Bill Gates Sr., the father of the richest guy in the world, pointed out why a progressive tax was the better option (than not having it). He said that," Bill Gates didn't invent the Internet. [He] just used it -- to make billions. There is no such thing as a self-made man. Every businessman has used the vast American infrastructure, which the taxpayers paid for, to make his money. He did not make his money along. He used taxpayer infrastructure, [which included] the banking system, Federal Reserve, etc. These taxpayer investments support companies and wealthy investors. There are no self-made men! They owe the taxpayers of this country back a great deal and should be paying it back." [2]

Remember, the father of Bill Gates said this. If you disagree with the rich on how they got rich, I seriously question your sense of logic.


3) Allows the less well off to stimulate the economy

The progressive tax allows the middle and lower classes to consume more, which they do because of the economic theory of the Average Propensity to Consume - which people with less money tend to spend more of it than save. Consumption fuels 70% of our nation's economy, so a P.Tax benefits the economy in this way. [3]


4) Is the most proportional, the Flat Tax is regressive

My opponent is against the progressive income tax (PIT), so he must be for the flat tax. A pure flat tax is inherently regressive, and let's less money in the economy in consumption, and reduces the burden of the already rich wealthy, who help fund this nation's infrastructure. The flat tax is purely regressive because the poor, who spend much of their money, and have little to none left over, would pay the same as the rich, who have much left over. The poor, who get much of their money, would get taxed higher than the rich. The rich pay lower rates in taxes usually than the poor because of Capital Gains and Dividends taxation, but there are exceptions. [4] [5]


Economic Affects of Progressive Taxation

You said that nations with a flat tax are better economically. The link was only a paragraph long, with no evidence. On the contrary, a progressive tax improves the economy.

With progressive taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest. Low taxes produce great excesses of negative activity as well. There is a propensity in business, and as a nation, to hollow out our businesses, and mortgage and sell off our assets, in order to grab short-term profits, which leads to downsizing, which is disastrous for local economies. So, progressive taxes help the economy by stimlulating consumption, but reduce the motive to gain short-term profits, and instead focus on long term growth. [6]

Investment fueling economic growth

There is no correlation between Capital Gains and Dividend taxes that lower rates = better economy. [7] [8] [9] Investment is needed. However, this is not going to depend really on tax rates unless they are really high. Investment was still high in the 1990s with a nearly 40% top tax rate. However, you also need:

  • A strong infrastructure to maximize your return
  • You need consumption to make your investment worth it
  • You need to be competitive against Big Business

The progressive income tax best provides these tools. With a progressive tax, the less-well off, such as small businesses, can still easily invest in expanding capacity. They are more competitive against big businesses too. Big business will not expand when they suddenly get a hundred million dollars. Big business expands with more demand, not more money. So, a flat tax system would reduce the opportunity of small business to compete, so your argument is refuted.

Plus, my progressive tax system proposal is still not that tough on the ultrarich, unless you make billions a year.

About marginal tax rates and incentive to work

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. What a worker contributes to GDP with an additional hour of work is that worker’s hourly wage, whether that hourly wage is $6 or $60,000 an hour. This in turn means that the effect on everyone else’s income if a worker chooses to work one hour less is precisely zero. [10]

More Government Revenue

Tax cuts will not bring in more revenue. When the Bush Tax Cuts were implemented, the CBO estimated that it reduced 10 year revenue by at least $2.9 trillion over 10 years. Your low taxes = higher revenue is refuted as well. [11]



Conclusion:

My opponent has failed to provide a real case against the progressive income tax like I have suggested. The progressive tax improves opportunity for people to climb the economic ladder, for small businesses to compete with larger businesses, and the P.I.T. improves investment by small business by allowing them to expand. Income inequality is reduced compared to a flat tax, and the P.I.T. therefore improves public health. With a progressive tax, infrastructure in a nation can be improved, which leads to a healthier economic environment. It is also more fair since the rich got rich from the taxpayers. There is no evidence that by giving the wealthy tax cuts (such as with a non-P.I.T. system), that the economy improves. No evidence. I also include a video I strongly urge you to watch. Thank you, VOTE PRO!

Also Jimtimmy: I challenge you to compare the GNP with the rate of taxation over the last fifty years-- for example the boom years of the '50s with their 90% marginal tax rate-- and explain that high tax rates discourage investment until you can do it with a straight face.

Sources:

[1] http://psych.mcmaster.ca...

[2]

Lakoff, George. Don't Think Of An Elephant!. 1st ed. Chelsea Green, 2004. p. 25-26. Print.

[3] http://conceptualmath.org...

[4] http://www.washingtonpost.com...

[5] http://www.csmonitor.com...

[6] http://www.alternet.org...

[7] http://krugman.blogs.nytimes.com...

[8] http://www.nytimes.com...

[9] http://crooksandliars.com...

[10] http://krugman.blogs.nytimes.com...

[11] http://georgewashington2.blogspot.com...


jimtimmy

Con

Looks like I procrastinated too much to do this round.

Too bad, this could've been a good debate.


You get the win though.

Debate Round No. 3
15 comments have been posted on this debate. Showing 11 through 15 records.
Posted by Contra 2 years ago
Contra
@Ron-Paul:

I would accept a debate like this in a few weeks or so, you can send it to me when you are ready.
Posted by Contra 2 years ago
Contra
Probably considered a new and improved progressive tax that is more fair and modern.
Posted by 16kadams 2 years ago
16kadams
Current tax system or new and improved progressive tax?
Posted by Ron-Paul 2 years ago
Ron-Paul
Contra, would you accept a debate like this in two weeks or so? I would take this, but I am swamped with debates. And at least you have everybody paying something. Your tax system is better than the one we currently have.
Posted by imabench 2 years ago
imabench
LETS GO PRO! LETS GO PRO!

(comments cannot be in all capital letters)
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by royalpaladin 2 years ago
royalpaladin
ContrajimtimmyTied
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Reasons for voting decision: I am removing my vote as per my proposal. Note that History Genius votebombed because he voted for a tie even though Con explicitly conceded the debate.
Vote Placed by 16kadams 2 years ago
16kadams
ContrajimtimmyTied
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Total points awarded:30 
Reasons for voting decision: Firstly although con gave up I will RFD this. Pros contentions where standing in the end and where more sourced ---> more convincing. I think his arguments where stronger and for the most part true. He had a funny photo, and he also had a good case for revanues. A pro win.
Vote Placed by 1Historygenius 2 years ago
1Historygenius
ContrajimtimmyTied
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Total points awarded:33 
Reasons for voting decision: TIE!