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Should We Tax The Rich ?

  Sanjiv Gupta CPA  Published 
Should We Tax The Rich ?

During the campaign period, Obama and Romney were at each others’ throats over the taxation of the rich. The basis of this problem seems to have arisen from the Obamacare program, which sought to make the rich pay a little more in order to cover some of the costs of medical care for the less privileged in the society. On one hand, the Obama administration hailed this as a way in which every person can be given access to a good health care system. On the other hand, Romney, who is considered to be rich by most standards, held that the system was designed to punish those who were rich. From this simple example, you can begin to understand just why the topic of taxation among the rich is an important part of the whole scheme of things.

A simple look at the start of all these problems shows that the rich are up in arms against any system that will reduce their spending abilities. However, faced with a government that seeks to ensure that they play their part in rebuilding the country, it becomes a very sore topic. Therein lays the root of the problem. The question is very simple, should the rich pay more taxes as a result of their success in business. On one hand, Obama wants to keep the taxes on the middle-income class while increasing the tax threshold on the higher income citizens. Romney and in effect the Republicans, want to keep the taxes on the middle-income earners low while sticking to the tax plan of the top 5% income earners. Now that the Republicans lost during the elections, it means that Americans want the rich to pay a little more and they agree with the democrats in terms of the tax plan that they came up with.

Even then, the different houses are controlled by the different parties and since their approval is required, it can only wait to be seen how far each will go to implement their policies. So let us look at the logic behind each of the schools of thought. The rich tend to make more money off the common citizens. This, in essence, means that they owe it to everyone to contribute more towards the development of the social and economic fabric of the regions in which they operate. On the other hand, it is the rich who have the disposable income to actually make large scale investments and therefore affect the lives of the different people. With this in mind, it might be in the best interests of the general public to actually tax the rich at the current rate. This will allow them to have more disposable income that they can spend and re-activate the economy. Even then, the decision seems to be on whether the citizens would rather rely on the efforts of the government or that of private individuals. As it stands, the former seems to be taking the day, with more people preferring to the government's way.