Eco Extra Credit
The rich individuals who are worried that the Tax Day of this year will be the last prior to their rates increasing have a lot of people to blame. Their blame will not just be on White House and Washington alone. They may additionally look at a pair of academically qualified and open learning economists from France whose studies constitutes the subtext for the war on tax fairness. These two economists namely Thomas Piketty and Emanuel Saez have tracked the earnings from the poor, those in the middle class and the rich in various nations in the world. Greatly, their work illustrates that the rich people in America have taken an increased share of the overall income for the last thirty years. These two economists are well known both in Washington and the economic profession as a whole. For example, Mr. Saez who is a university professor has won various awards including the MacArthur Fellowship grant. In addition, his counterpart, Mr. Piketty has won the Le Monde award for the best and young economist.
In the real sense, these two top economists admire America. According to them, the country has awesome entrepreneurial skills, academic excellence and its innovative and creative spirit. They are also still in bewilderment if the American rich who hold the majority of the income gain in America should pay increased taxes. For example, Mr. Piketty asserts that America as a country is getting increasingly accustomed to a fully crazy inequality level. According to Piketty, withstanding the inequality level in America should be radical rather than other people viewing it only in terms of lowering it. On the contrary, most work of these two economists still remains outside the reasoning of the polite political talks.
The two economists provide an argument that even the boldest plan of Democrats to raise taxes on the rich which constitutes the Buffet Rule will not contribute much in reversing the gains which the rich get. The majority of the tax proposals from the Republicans may raise income inequality in the short run. For the conservatives, high rates of taxes would cause a stifle for the growth of the economy at a low level and result in some enterprises and high-income employees to run away from other countries. Supposing top American tax rates were increased highly, enterprises could not move easily as then do now. This is according to both Saez and Piketty. According to Ike Brannon, it is difficult to increase a marginal tax rate to a rate of 70% without having an effect on the economic growth. On the other hand, both Suez and Piketty argue that most nations have increased tax rates including America. This has been the case without reducing or encouraging income concentration within the hands of the rich.
Additionally, America is changing and becoming like ancient Europe. In the actual sense, this is extremely queer on historical grounds. According to Piketty, America used to be initially an extremely egalitarian in both spirit and actuality. Inequality in income and wealth used to be extremely large in France. Furthermore, Saez is in much doubt if income inequality is going to decline simply on its own. These two economists carried out a study on income inequality in America. Their results really surprised them. In the same way with other industrialized nations, income inequality in America declined after the Second World War. This was a period referred by economists as the “Great Compression,” it then remained stable until the 70s.
I agree to what these two economists are recommending. It is a fact that most income in America is held by the few, rich individuals. Hence, new calls should be renewed for the rich to be highly taxed. The idea that the rich are taxed similarly like other average and poor Americans is not realistic.