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Political Philosophy of Redistribution Income
There are three political philosophies;
- utilitarianism,
- liberalism, and
- libertarianism.
Utilitarianism is the philosophy according to which the government is obligated to choose such policies to maximize the total utility of everyone in the society. The case for utilitarianism is based on the premise of diminishing marginal utility of income. Liberalism envisages the government to choose policies as evaluated by an impartial observer from behind a veil of ignorance. Libertarianism is the philosophy in which the government would not indulge in the redistribution of income but will only punish crimes and enforce voluntary agreements. I would support utilitarianism, as it is the role of the government to ensure that everyone in the society is benefitted (Phoenix).
Incidence of Income Tax
Income tax being a tax levied on the personal income of people, corporations and other legal entities. There are different systems of taxation exists. Progressive tax increases progressively with the increase in the taxable amount. The term progressive tax applies to personal income taxes. In the case of personal income tax, progressive taxation makes people with a higher disposable income to pay income tax at higher rates than those having lesser income. In progressive taxation, there can be numerous tax adjustments in the form of tax exemptions, tax credits or selective taxation, which could create progressive distributional effects.
he argument in favor of implementing progressive taxation is that with the increase in the income levels, marginal propensity to consume declines. With the progressive taxation, it is argued that economic demand can be stimulated by fixing a lower tax burden on the people with lesser income and increasing the tax burden on the people in higher income brackets. The negative aspect of progressive taxation is that it shifts the economic production of society from capital goods towards present consumption of goods.
This will impede the economic progress. A regressive taxation system on the other hand, is the reverse of progressive taxation, in which higher rate of tax is levied on the people with lesser income and people with higher income are taxed at lower rates. Examples of regressive taxation can be found in value added tax or other forms of sales tax. A poll tax and television licenses are different forms of regressive taxes. Property taxes are often regarded as regressive taxes. The advantage with regressive taxation is that when levied on certain non-essential commodities the regressive taxation tends to be progressive. A flat tax is a system, which taxes people at constant rates. For instance, the corporate taxation is flat rate taxation.
The flat rate of taxation ensures certainty on the government revenue as the personal household income and corporate income are taxed at flat rate (Astronomy.com, 2009). Of the three systems, I believe the progressive rate of taxation is more practical. Even though there are major criticisms against the implementation of progressive taxation, because of the economic advantage the progressive taxation creates it can be considered as the best way to tax people.
Redistribution of Income
Redistributing income has greater benefits, even though there are little costs involved in the exercise. The benefits are derived by the society from the diminishing marginal utility of money. This implies that the same amount of money would provide more value to those people who start with little amount of money as compared to those having larger money (Baron, 1998). Therefore, so long as the money does not reduce the incentive to work, there is no harm in redistributing income and the government can involve itself in the redistribution of income.
References
Astronomy.com, A. (2009). Income Tax. Web.
Baron, D. (1998). Why Government Should Redistribute Income. Web.
Phoenix. (n.d.). Chapter 20: Income Inequality and Poverty. Web.
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