Question

Weigh the trade-offs between "fairness" and "equality" in the U.S. tax policy for foreign individuals doing business in the United States. How do you think such policies encourage (or discourage) economic growth from domestic and foreign sources?

Answer 1

Equality aims to promote fairness, but it can only work if everyone starts from the same place and needs the same help. In respect of US tax laws, and eventually every other big economy of the world, trade is now often done cross borders. There are US traders having business in Asian countries and vice versa. In absence of fair and equal tax policy, it may become boon for some country and bane for some.

Advantages of equity and fairness in respect of taxing income of foreign individuals as per US citizens are that they will invest in US economy thus producing employment and growth. It will create compititiveness in the market and lead to improvement of services for the customers.

Whereas disadvantages include the elimiation of medium and small local industries because of competition among large players of foriegn countries, lack of job opportunities for US employees, and inequality if the home country of foreign individual do not give same tax advantages to US citizen working there due to unfair tax treaties.

I think such policies encourage economic growth as at bigger picture it makes the market competetive. leading to continuous development in the products, services being offered.