Question

Who Benefits from a Tax Cut

Do a web search to find another example of opposing views which are supported with statistics. (Any contested, polarizing issues of the day like universal health insurance, immigration, and green-house gases should provide ample source material.) Post links to the resources you've found, and in your own words, briefly summarize the issue and the opposing views.

Rich Pav More Under Tax Cuts High-Income Households Receive Highest Dollar Benefit from Tax Cuts Average annual tax benefit Share of Total Income Taxes Paid to Federal Annual Income Treasury estimate Less than $10.00 $53 $10,000 to $20,000 $387 85% without tax cuts Actual tax payments with tax cuts 63% 82% 68% $20,000 to $30,000 S771 $30,000 to $40,000 896 $916 57% 50% $40,000 to $50,000 $50,000 to $75,000 $75,000 to $100,000 $100,000 to $200,000 $200,000 to $500,000 $500,000 to $1 million More than $1 million 37% $1,132 31% $1,900 $3,766 $6,743 6,701 Top 5% Taxpayer Income Level Top 1% Top 10% Top 25% $6,349 $0 $2,000 $4,000 $6,000

Answer 1

It is a general belief that more money is beneficial for the economic development of any country as it can be used for investment, employment, education, training and many more areas.

As far as tax cut is concerned, it is said that it is more beneficial for income-earning households. It is said that 1.5 trillion dollar in deficit financed tax cut, more benefits is for the corporations and top 1% of income earning households.

According to the reports of 'The Street' - out of the total tax cut almost 80% benefit is seen for Americans wealthiest households.  

But as per the reports of Tax policy Centre, Middle class will be the beneficiary segment than rich people.

Arguments in favour of richer

a. Tax cut will lead to increased investment. It is predicted that tax cut would enhance the income from 4000 dollar to 9000 dollar. As a result more money investment result on more employment  

b. It will increase liquidity in the market thus more money will be available in the market.

C.An increase in the money supply increase training programme and improve workers skill.

Arguments against rich

a. It is seen that wages are not increasing in proportion to the increase in money or investment which increases profitability for the company only.

b. An increase in the money in the hands of rich doesn't necessarily increase demand of products or consumers. This is because richer section already have more than required thus their money increase doesn't bring new consumers in the market  

c. It is not necessary that an increase in liquidity results in more investment. They can keep money as savings.

According to the reports, US have 2 trillion dollar in assets which is more than the GDP of Canada or Italy.

Thus tax cut results only in increased liquidity and mot always result in increased demand of products due to lack of required investment. Only existing assets will increase.