Governments Should Try To Reduce The Gap Between Their Richest And Poorest Citizens
Last updated: March 7, 2019
Wealth gap is a problem at the core of our society. The government, as the moderator of society must step in to account for the gap between the two boundaries.
Before moving onto substantive points, the Proposition defines “government” as a formal entity belonging to a state that enforces the state’s policies. Its task lies in acting on the behalf of its citizens’ welfare and happiness. For the scope of this debate, we will discuss only democratic governments, in which all eligible people enjoy the right to make their own decisions under the principles of freedom and equality. The phrase “reducing the gap” points to our policy. Our policy may be described as a combination of government-initiated actions—which includes increasing progressive income taxes and providing education for the unemployed and the underemployed—directed at reducing the wealth gap to a reasonable degree.
Such policies are the most effective in bridging the wealth gap. The private income tax in Sweden borders on 15.8% as contrasted with 3.4% in Korea. The effect of South Korea’s Gini coefficient prior to redistribution is 0.374 and, after, 0.358; thus the redistributive effect of its tax policies only calculates to 4.5%. Contrast this with the 101.4% effect of Sweden’s, which achieves a stellar Gini coefficient of 0.218, and one immediately sees the immense contribution redistributive policies have on inequality levels.[[Direction for Social Welfare Based on International Comparison of Income Distribution, Kyungjun Yu(2003), KDI]] As for providing worker education programs, investments on education, job training, and employment services must increase in order to better the human capital of the poor.[[http://www.marketwatch.com]]
United Kingdom’s ex-prime minister once said “justice for me is concentrated on lifting incomes of those that don't have a decent income. It's not a burning ambition for me to make sure that David Beckham earns less money.” 1
In other words, what should worry us when debating on the gap between the poor and the rich is not the profit the latest category makes. By contrast, encouraging the production of wealth attracts even more wealth, and this does not only benefit the rich, as we will further on demonstrate.
The philosophy of the opposing team is that, looking at the bigger picture, these apparent profits produced by progressive taxes turn out to be a burden for the whole economy.
The mistake of the affirmative speech is that it tries to solve the gap problem by acting on the main supporters of the economy, whilst what we sustain is that the most efficient manner to tackle the problem is by trying to approach the incomes of the poor to the revenues of the wealthiest, without affecting the budget of the latter category.
We assume that we are discussing about a democratic society with a capitalist economic system at its core. In this case the state governs through a carrot & stick method, where the carrot is the incentive for the individual to earn capital and invest it in order to generate wealth and the stick is the rule of law which makes sure that this accumulation of wealth is done fairly. Also, we argue that the way for a society to progress is through private investment and education provided by the state which is funded mainly through tax collection. The aim is not focused on punishing the rich but helping the poor cross the chasm between their current state and the middle class where most citizens should be in a healthy economy.
Reducing the wealth gap is practical and efficient.
One chronic problem the wealth gap causes is an imbalance between production and consumption. As the market cycles it creates added values. A direct corollary to wealth gap is that such added values become concentrated in the hands of the minority, or the rich. The rich, however, does not consume quite as much as the gap in wealth. The amount of goods bought for livelihood does not differ significantly among income groups and, even when luxury goods are accounted for, the money consumed does not match the gap in income.[[http://www.successguide.co.kr/170]]Because the degree to which members of the private sector consume is rather limited, when added values collects excessively under the rich individuals, consumption fails to follow up with production. Because production becomes less profitable than it could be under evener income distribution, producers do not invest surplus values in production but more and more capital become subject to speculation. Thus, for producers, emphasis shifts from using capital for production to making unearned income through speculation. This leaves an unhealthy precedent for the economy.
The current social security system is already showing its limits. It causes well-fare sickness, because it fails to provide incentives to work. Second it incurs significant deficits, as social security costs are irrecoverable. $2.5 trillion us debt is attributed to social security alone.[[federalbudget.com]]
While the notion of progressive tax might appeal to our sense of social justice its main drawback resides in the backfire effect it produces regarding revenue collection by the state through corporate and private taxes. Thus it is counterproductive because it discourages earning more money by the individual since he and his employer have to pay more taxes.
Furthermore, the progressive tax triggers a whole mechanism of searching for loopholes and ways to evade paying the high amounts required which in turn obligates the state to make the “stick” is a bigger and more complex one leading to an unnecessary bureaucratic system aimed at hunting down tax evaders.(1) This system in the current state of affairs equals economic suicide.
Thus, what we propose is that a simple flat tax is introduced and this will benefit the whole society and the state: it will simplify the tax code thus making the huge bureaucracies operating in both state and companies redundant; it will generate more tax collection because it will act as an incentive for the taxpayer (corporate and private) not to risk tax evasion or search for loopholes in the system; finally, it will be the spark for the engine of growth and investment which in these turbulent economic times is
an absolute imperative. As the same study shows, if the United States of America would introduce a flat tax the savings would grow by 7%(2), due to the fact that the people would not be discouraged to accumulate wealth and dividends. In a progressive tax system, the high sums of money a rich person has to pay to the state do not stimulate the accumulation of wealth, but more likely the consumption.
Wealth gap undermines equality of opportunity; reducing it makes society fairer.
The question of fairness should prompt the government to take an active stance in redistributive measures through income taxes and provision of education, including job training and employment serivces, to the poor. This takes society closer to equality of opportunity, which accords to the ideal of fairness. The ideal gives the government justification to actively make up for the societal system that causes inheritance of rich and poor statuses, of capital that creates more capital and furthers the wealth gap.[[http://www.msnbc.msn.com/id/16115342/ns/business-answer_desk/t/why-wealth-gap-bad-thing/]]
People should be motivated to evolve from both social and economic level, wherever they are situated, keeping, at the same time, a structure of social classes of the society. Democracy is that regime in which education and working assure economic and social evolution. By no means this rule can be broken in order to artificially interfere in societies’ official behalf, as a state, which can only prove wrong, when “natural” rules are unjustifiably broken.
This basically means that the income a person earns a month is directly proportional to the amount /quality/level of work. If for example a private investor opens a company, under normal state requirements he is obliged to pay 16% from his income taxes, the rest of 84% representing his profit. Supposing that the company develops in the following years and it increases its production, following the propositions argument, the state will require him to pay taxes up to 60% of his income. This way the private investor works for the state and not for him. Besides this grate unfairness, in order to avoid giving this much money to taxes, investors will try not to give it using any means necessary. Thus leading the way to corruption.
The initiative of helping the poor should come from their own behalf or else the tax evasion will raise. Moreover, corporations already have the possibility to prove generosity, by the actions called CSR (Corporate Social Responsibility)(1). This way, society has a control lever over the people really interested in investing human, material and time resources on social matters. Once again, the democratic state that we agreed to talk about today, has no right to intervene in matters of social classes, democracy being characterized by power to people, namely the possibility to change things in their hands, without an interventionist state.
[Response to rebuttal] Redistributive tax, even when progressive, does not hinder growth and achieves the purpose of bridging the wealth gap--to which the Opposition seems not to disagree!
Let us first reinforce our unrebutted point that taxation aimed at redistribution is sustainable. One common way is to rely on social security alone to bridge the gap, but such is already showing its limits. Not only does it incur significant deficits, social security cost is irrecoverable. Moreover, whereas the Opposition conceded that pooling the tax revenues toward education is a positive investment, such is only long-term and must be coupled with direct redistributive measures.
The Opposition claims that redistribution through tax “discourages earning more money ... since [people] have to pay more taxes.” This statement makes no sense even in the intuitive context of human nature, the insatiable desire to have. Because entrepreneurs or high-income groups in question perceive higher tax rates, in order to secure a certain level of disposable income, they will exert themselves harder than in otherwise conditions.[[http://www.cis.org.au/...pm-66.pdf]] Profit motive and incentive for entrepreneurship remain intact.
There was also mention of clearing loopholes inherent in progressiv taxing. One, as the focus is on value, devising a legally fool-proof policy is out of the scope of this debate. Two, the presence of loopholes should not be an excuse to abandon a necessary policy. It is at most a factor to consider. Three, unless the gov is totally incapable, progressive tax generates more revenue than flat tax.[[http://www.lolife.com/...prog-tax]]
The Opposition said, our way doesn't "stimulate the accumulation of wealth but consumption." Thanks--exactly!
The opposing team uses the references to the economical situation in the United States of America ignoring the fact that the country already has the most progressive tax in the world. The highest 10% earners are paying 45.1% of the total sum collected by taxes even if their venues are the equivalent of only 33.5% of the market income.(1)According to the affirmative side, this equation should boost the state’s budget, thus help alleviate the poor people’s situation, and also combat the tendency towards speculation producers have in a flat tax system. However, looking at the real situation, we can’t help noticing that the USA is recording the widest gap between the rich and the poor in its history, which prooves that the solution proposed by our colleagues does not help as they sustained. (2)The fact that the country has to invest 2.5 trillion $ debt distributed only to social security is another evidence that the progressive tax does not ease the poor people’s situation, and does not encourage economic growth. The state does not have the same tools to create jobs at a large scale as corporations.We agree upon “the insatiable desire to have” of the human kind, and we presume that it is exactly that what stops 30% of the investors in the USA from correctly reporting their revenues in order not to be highly taxed. The opposing team will argue that in order for that not to happen the state can control tax evasion by the means of the law.However, because of its loopholes the phenomena is harder to control in the complex system proposed by the affirmative team, and furthermore, a proof that the investors are affected by its high costs.(3)
[Response to rebuttal] Equality is not just about same percentage of income; and certainly it's the government's role to prevent it from being so.
We have three levels of response. First of all, the opposition fails to engage with our point. The proposition showed how private property generates inequity in opportunity for the next generation—how the system contradicts itself. The opposition naively reiterates progressive tax is against equality, when we proved things were not equal. Thus we go back to the inherent contradiction; while the opposition agrees that gap must be reduced, it opposes to principles that show why.
Besides, what does Opposition mean by equality? There comes the second subpoint; the Opposition does not have proper reasoning. It believes there are “natural rules” and that it is natural that income should be proportional to income. However, who draws the line on what is natural and equal? Why should “extra” governmental regulation be considered “artificial” when a legal system already requires governmental involvement in society—not to mention the “extra” rules are already partially incorporated into the “natural” system by 16th Amendment of the US constitution, for example. Who decides whether equal percentage from income is the right interpretation of equality—why not equal amount or different amount that invokes equal sense of loss? Simply saying progressive tax takes away more percentage is not a logical reasoning of equality.
Since the Opposition does not have proper reasoning, the argument based on principle becomes quite similar to simple preference. The opposition reintroduces the corruption, which, as we showed in the first point, only has minimal influence as drawbacks. Only one thing new and quite convincing is corporate social responsibility, the alleged solution by the market. However, CSR is not altruistic, but a reluctant response to growing social demand.
and note that our policy aims to do so in the long-term.
At the level of this argument we have identified two main conflicts.The first one is about equality of chances and the second is about the concept of the articifial intervention of the state in the economy.
First of all, the comparison between Prince William and an african-american our colleagues offered in their first argument is unreasonable.It is biased to imply that every rich person is born a prince, and what we tried to sustain is that meritocracy remains a main pillar of capitalism. There are many examples of poor-born people that, having worked hard, belong to the top earners category in present times. Salaries are offered in function of the number of hours spent working, in correlation with the level of difficulty of the job, and the qualifications a person has. Mainly, these elements depend on the motivation an individual has in order to achieve welfare. It is indeed, a different task for each of us, as we are all have different traits and characters. Does that also mean the Government should tax lower the ones who were born lazier?
The final rebuttal from the opposition is that the main role in economy growth is held by private investors. The artificial system we refferd at is the idea of collecting money by taxing higher the rich people, with the illusion of sustainability. The state does not have the same power of producing and reinvesting profit at a large and spread scale as private corporations do if our goal is sustainability. The government should ensure the ideal conditions for the market to support itself and realize that taking money from the rich in order to pay social security is not going to produce profit.
Finally, just because a rule is introduced in the Constitution, that does not make it automatically correct or desirable. Let’s take a look at all the rules included in the Constitutions of the ex-sovietic block to confirm that.
Bugil Academy (South Korea) Summary
As the opposition never proved the link between gap reduction and economic growth, virtually all of their rebuttals and one constructive point, except those about equality, have no place in this debate.
The Opposition’s misunderstanding continues with straw man fallacies. Not responding directly, the Opposition rebuts superficially similar yet false representations of our points. We pointed out that the system does not guarantee fair opportunity, but the opposition argues that some of the poor did succeed. The focus is not the possibility, but extremely low probability; behind a few successes lies millions of the poor who won’t appreciate the opposition’s “liberty to choose destiny.” We pointed out the Opposition presumes—or purposefully pretends—existence of equality, or artificiality of governmental actions. The opposition responds that the latter being in the Constitution does not prove anything, while it was simply an example to show no line can be drawn for artificiality without sound reasoning. We pointed out progressive tax will better achieve redistribution. The opposition dangles on incentive and corruption, both of which are too minor to undermine our policy. The Opposition’s obsession on progressive tax is also a fallacy; the tax and our comprehensive education of the poor aim to amend the system itself with fair opportunity that leads to economic independence—a merit to which the opposition never responded. The Opposition’s ultimate regression to the straw man fallacy manifests itself in the example of the US progressive tax. Not only is our policy much bigger than a simple tax collection, but also the increasing gap in the US originates from various factors that altogether form the very system we try to reform.
While we both have better understanding of the spirit of this debate and present arguments accurately reflecting our socioeconomic reality, the Opposition stumbles over lack of values, misunderstanding, misrepresentation, and ultimately, lack of a standpoint.
The flat tax sustains economic growth
The main advantage of a flat tax is encouraging investment in all economical sectors, which equivalates with the creation of more jobs, thus higher chances for the low-income category to prospere. The purpose of corporations is to maximise their profit, and it is obvious that the tax system is a sensitive topic that directly influences their politics. As proven by the evidences mentioned in our text, the corporations are not as active in these states as they are in the countries that have adopted the flat tax. Having the choice of opening a new business in a state with a progressive tax that could cost them up to 40% of their profit, or moving to a state where they would have to pay under 20%, their decision would not be as hard to guess or understand.
The idea is demonstrated by the study “The Economic Effects of A Flat Tax”, which shows that, if applied in the USA, the flat tax would generate a 7.6% income growth for the poorest. This means that instead of taxing the rich people in order to use the money for social security, a better solution is encouraging investors create new jobs, and thus reduce the actual number of people who need this kind of help. (1)
The hypothesis of economical growth is again confirmed by the case of Russia, one of the 25 countries in the world that have given up the progressive tax in order to replace it with a 13% flat tax. The immediate effect was a 10% economic growth, sustained by a dramatic fall in tax evasion. (2)
If our aim is to help the poor people, the most sustainable manner to do that is to sustain the economical growth. These examples offered show that a flat tax assures the creation of jobs that would help the poor help themselves.
The Proposition stresses once again: economic growth does not automatically narrow the wealth gap. In fact, research shows that throughout history it has worsened it. Flat tax is not the solution.
In this debate, the two manners of earning ones living are represented on the one hand, by the progressive tax, and on the other, by imposing the flat tax.
The negative’s team aim was to prove that the problem of the wealth gap cannot be solved by the solution proposed by our colleagues, and that a more sustainable solution is given by the flat tax.
We agreed on the existence of a production-consumption imbalance created by the wealth gap, and we accentuated that what we should concentrate on is the problem of the poor people in itself.
The justification why we suggested that resides in the fact that these difficulties are only worsened by the progressive tax, as it discourages investors, and thus deepens the economical problems. It is central to the understanding of the way capitalism works not to only acknowledge that the private corporations are chained to the phenomena of economical growth, but also to create the fiscal comfort in order for them to develop. As studies show, the result would be the actual improvement of the economical situation of the low-income category.
The other conflict of our debate was related to the idea of equality of chances. What we sustained is that meritocracy is more common that the exceptional cases of people who inherited wealth, and that even so, a progressive tax would not lead social justice taking into consideration all the side-effects we have explained.
In conclusion, we hope that in spite of the barely present structure of our case, we managed to convince you that the solution headed by our opposing team is not sustainable.