The Application of Ethics in Progressive Taxation
For many centuries, societies have ever judged persons based on their societal category. This societal construction permits the society to put an person or a group in a certain societal category based on their economic position. The four societal categories include ; the upper category, the in-between category, the working category, and in conclusion the poorness category. ( Business Dictionary, Social Class ) With income, comes revenue enhancement that is given to the authorities based on the income earned yearly.
This leads us to oppugning whether it is morally justifiable to revenue enhancement wealthier persons and households heavier while taxing the lower income persons and households at a lower revenue enhancement bracket. This procedure of revenue enhancement is considered to be “progressive taxation” . ( Investopedia, Progressive Taxation ) Progressive revenue enhancement is approved by some whereas it is criticized by others. This research paper will reflect upon these two positions and besides reflect whether revenue enhancement aimed at redistributing wealth is morally sensible.
Harmonizing to John K Roth’s definition of deontological theory in “Ethics” , he defines deontology to be the finding of whether an action is ethical or unethical harmonizing to its purpose instead than the effect of the action. Consequentialism is the finding of whether an action is ethically right or wrong through analysing the effect of the action instead than the purpose. ( Roth 315-316, 367-369 ) During this research paper, Roth’s ethical theories of consequentialism and deontology will be used in order to separate whether progressive revenue enhancement and the usage of revenue enhancement to redistribute wealth can be identified as morally or unethically right.
Harmonizing to the article “Understanding Attitudes toward Progressive Taxation” , it is believed that the progressive rate construction is one of the most desirable signifiers of revenue enhancement upon many philosophers, economic experts, and revenue enhancement policymakers. Those that believe in progressive revenue enhancement have the impression that the higher-income taxpayers should be apt to higher revenue enhancements than those of lower income. ( Michael, Peggy, Cassie 166,168 ) Harmonizing to “Progressive Taxes” by Joel B. Slemrod, in a progressive revenue enhancement strategy ; “one’s revenue enhancement construction is more progressive than another if its mean revenue enhancement rate rises more quickly with income.” ( Selmrod ) Harmonizing to the deontological theory, the purpose of this progressive revenue enhancement construction is to revenue enhancement every person or household harmonizing to their income and so it betters the life of many people within the society. The effect of the revenue enhancement policy will let all persons within the society to populate their lives harmonizing to their demands. Affluent persons will still hold adequate income to populate better than those of lower societal categories, doing it morally ethical because it’s effects harmonizing to the consequentialist theory is salvaging many lives from poorness.
An experiment was done on four-hundred and 60 belowground pupils that were taking nine introductory classs and two extra revenue enhancement categories at two big university establishments in different parts in the United States. The pupils were given different scenarios to each of the revenue enhancement policies that are used to revenue enhancement citizens in the United States and this included ; regressive, level, and in conclusion progressive revenue enhancement. ( Michael, Peggy, Cassie 169-171 ) Regressive revenue enhancement is the contrary to progressive revenue enhancement, in which revenue enhancements the lower income people more than the wealthier persons. ( Investopedia, Regressive Tax ) Flat revenue enhancement is the application of the same revenue enhancement rate among all societal categories. ( Investopedia, Flat Tax ) The consequences of the experiment concluded that the pupils preferred progressive revenue enhancement over the other two signifiers of revenue enhancement policies. Progressive revenue enhancement had the higher per centum compared to both level and regressive revenue enhancements. Seventy-nine per centum preferred progressive revenue enhancement rates over level, whereas 76 per centum preferred progressive revenue enhancement rates over regressive. ( Michael, Peggy, Cassie 171 ) This demonstrates that among those that do hold a basic cognition of revenue enhancement, they believe that progressive revenue enhancement is the fairest and the most ethical manner of conveying among equality in the society.
Those that support progressive revenue enhancement believe “that revenue enhancements should be assessed proportionately to income, and that upper-income taxpayers are avoiding paying a proportionate revenue enhancement and therefore higher revenue enhancements on upper-income individuals are needed.” ( Michael, Peggy, Cassie 185-186 ) The upper-income taxpayers are avoiding paying their proportion of revenue enhancement to the authorities and which leads to a negative purpose of non willing to assist the society as much. This can be viewed as unethical because deontologists would desire the affluent societal categories to be lending more to assist the society attain felicity among the greatest figure of people harmonizing to Roth’s term of utilitarianism. ( Roth 1531 ) The effect of unwilling to pay their proportion of revenue enhancement will take the society to non come on every bit much as if they did pay their proportion of revenue enhancement harmonizing to the progressive revenue enhancement construction, and hence doing it unethical for those affluent persons to avoid paying their proportion of revenue enhancement.
Progressive revenue enhancement helps the authorities apply “Income redistribution” to break the society. Income redistribution is the series of actions which takes income from some persons within the society and redistributes it to others. By roll uping revenue enhancements, fees, subsidies and granted societal benefits, it permits the authorities to ordain this societal benefit of income redistribution. Governments besides collect revenue enhancements, to finance province establishments which benefit in the aid to break ease the societal and economic life of communities. Progressive revenue enhancement helps in the cause of Income Redistribution by taking more from the higher income people to assist those persons and households that are under poorness through allowances, subsidies, public goods and services. The pattern of taxing the higher income persons and households based on their disbursals like luxury goods, help the agencies of redistributing income among the society to set the inequality among the persons in the society. ( Radu 228-229 ) Harmonizing to deontology, the purpose of income redistribution is to convey an equalitarian society by cut downing the spread in income between the rich and the hapless people. This transportation of income is looking to work out the societal category inequality and hence doing it ethical. The effect of income distribution reduces societal tensenesss and creates equalitarian communities that are more united. It is besides leting the authorities to assist those in economical need through hard currency transportations, nutrient tickets, and societal lodging. ( Radu, 229-232 ) This action harmonizing to consequentialist is ethical because its effects are breaking the lives of those that are populating in hapless conditions and leting them to populate a standard life instead than a rough one.
While some believe that progressive revenue enhancement construction is morally ethical, there are others that do non believe this revenue enhancement policy is best for the society. They believe progressive revenue enhancement is politically irresponsible because it allows bulk of the federal income revenue enhancement to be contributed by the top one per centum of taxpayers in America that amounts to 38 per centum of federal income revenue enhancement, whereas the bottom 50 per centum of taxpayers pay a manner lower part of merely two point seven per centum of income revenue enhancements. Harmonizing to deontologists, progressive revenue enhancement would be seen as unethical because the purpose of the bottom 50 per centum of taxpayers is to move egotistically and depend upon the wealthiest of the society to pay a major part of federal income revenue enhancement while merely two point seven per centum of incomes revenue enhancements are paid by them. It is estimated that 40 six point nine per centum of workers did non lend and pay the federal income revenue enhancement during 2009. This consequences to a minority of taxpayers that are affected with the addition in revenue enhancement rate and leads the bulk of taxpayers to move instead selfishly and depend upon merely the top wealthy people to pay their personal federal income revenue enhancements to convey alteration to the society. This political irresponsibleness within this taxing policy, leads to an unfair intervention upon the affluent people. ( Hagopian 23 ) The effect harmonizing to the consequentialist theory would besides be unethical, because the effect of 40 six point nine per centum of workers non paying their federal income revenue enhancements would take to unfairness among the minority because major part of the income revenue enhancements is being provided by them.
The 2nd statement against progressive revenue enhancement is the fomenting discord. In the United States system of authorities and all of Western states, the issue and tenseness between the political system and the economic system exists. This tenseness among both political and economic domain, leads to the act of challenging over public assistance and revenue enhancement policies. ( Hagopian 24 ) The act of challenging over the public assistance and revenue enhancement policies can be viewed as ethical harmonizing to deontology, because the purpose is to cut down the built-up force per unit area among the political and economic system in order to convey positive alteration. Those whom agree with income redistribution hold the fact that inequality stirs up dissension and discord. Whereas those against progressive revenue enhancement, believe that discord is still present when progressive revenue enhancement Torahs are unjust towards those people whom are being taxed. Therefore, a progressive revenue enhancement construction will take to people revolting because of the inequity-based rule that is present in the revenue enhancement policy harmonizing to those against it. ( Hagopian 24 ) Harmonizing to the consequentialist theory, the act of challenging against the progressive revenue enhancement construction can be seen as ethical, because it can take to alter within the system like deciding the issue of holding more people pay their income revenue enhancements instead than holding the affluent societal category contribute to largely all the federal income revenue enhancement.
Admiting both sides of the statement towards progressive revenue enhancement, I believe that this signifier of revenue enhancement can be both morally ethical and unethical harmonizing to deontological and consequentialist theory by Roth, and which makes this burdensome construction flawed. This can let us to make a new philosophy of equity that can be morally justifiable harmonizing to both consequentialists and deontologists. This philosophy is constructed on five basic rules.
The first rule includes how the most just signifier of revenue enhancement system is one that bases its policy on the value of benefits received. ( Hagopian 24 ) Harmonizing to deontologists, this rule is ethical because the purpose to pay revenue enhancements to the authorities is to have valuable benefits in return that benefit the greatest figure of people and brings felicity harmonizing to the utilitarianism theory. This policy will take the authorities to establish this rule on the benefits they provide to the society. The effect therefore will be positive because the authorities will seek to maximise the benefits they offer to the citizens from the revenue enhancement they collect from the people. This makes this principle ethical in both footings.
The 2nd rule includes how income is perceived to be the “most just step of the value of benefits” and besides the ultimate wellbeing of an person. Therefore, revenue enhancements should be taken proportionately to the benefits received in return from the authorities. ( Hagopian 24 ) Based on the deontology theory, the purpose of this rule is to convey equality among the society by holding the authorities provide equal benefits from those revenue enhancements collected proportionately from each person, and therefore doing it ethical. The effects of the rule will let each person to hold a good amount of their income for day-to-day life disbursals due to the advantage of relative taxing and can besides advantage in the governmental benefits that is provided from the revenue enhancement collected. This rule rejects the impression of per-capita revenue enhancement system and applies a revenue enhancement system of proportion alternatively. ( Hagopian 24-25 )
The 3rd rule of this philosophy is connoting that merely “clear income” should be taxed. By clear income, it means that those under the poorness degree are non required to pay revenue enhancements because their below the degree of subsistence and therefore they could hardly pay their life disbursals. Whereas those that are above the degree of subsistence should pay revenue enhancements because they are more than capable in populating their lives with equal excess of income after all their day-to-day life disbursals. ( Hagopian 25 ) Deontologists would believe that this rule is morally justifiable because the purpose of this rule is to convey an equalitarian society and assist those that are incapable to populate by non holding them pay revenue enhancements. Those that are beyond the degree of subsistence should pay their revenue enhancements to allow the authorities to hold some signifier of funding to assist the society as a whole. The effect of this rule is moral because it allows a greater figure of people to populate a just life with an equal amount of income.
The 4th rule is how progressive revenue enhancement on income is unjust when it comes to work attempt. In an equal playing field, those that have a high-value aptitude by and large make more income than those of low-value aptitude. Among each grade of aptitude, includes a “mini-society” that differentiates income merely through the work-effort they put in to doing money. Hence, an person that puts a work attempt above the median in his/her grade aptitude will do more than person that puts a work attempt below the median. Although the single whom is implementing more work attempt is doing more money, he/she must pay more revenue enhancements than the individual who puts less work attempt in the grade of aptitude based on the progressive revenue enhancement construction. This unjust system harmonizing to consequentialist will take to a great figure of people of doing less after-tax income per hr than person else in their grade of aptitude because they worked harder to gain more income. Progressive revenue enhancement in this sense is seen as unethical because of its unfairness.
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