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Topics Homepage> Taxes increases are bad for America

Taxes increases are bad for America

PRO (8 assertions)

No framework

1. Assertion: Business creation is hindered by high taxes

Reasoning: As a capitalist country, America revolves around satisfying the consumer and increasing industry. As such, you cannot really compare America to other countries. More taxes hinders the creation of businesses, simply due to the lack of government assistance and demand of payment when you are financially unstable in the beginning. This is unhealthy for a capitalist country.

Evidence: According to the US Department of Labor, over 300 businesses were closed in these past 6 months alone due to reported “high tax rates.”

2. Assertion: Creativity is decreased when taxes are higher

Reasoning/Evidence: According to a study conducted by the International Database of Economics and Management, only 18% of businesses in high-tax countries were made in the past 5 years; compared to the United States 28%. The basis of capitalist countries is the risk/reward factor, and high taxes render the “high reward” something not-so-high, something achievable by simply saving up in a bank and collecting interest. According to international economist Paul Fregeins, “creativity is what drives the modern global economy. By investing into new areas and spending money to fund economical risks, our global economy grows. These ventures create jobs, make money, and help the growth of industrial progression. High taxes render these ventures almost useless- the reward you could have earned is now half of it.”

As economist Jonathan Switzch states, “In our current economic crisis, the United States does not need more taxes. In fact, in any economic state, high tax rates is not compatible with our capitalist society. As the US was constructed with capitalism in mind, high tax rates will decrease the US GDP and harm the consumers, both internally and internationally.”

3. Assertion: America needs private sector investments right now

Reasoning/Evidence: The government doesn’t have corporate competition, whereas businesses do. Investments from the private sector helps the economy more than the temporary job gains that the government can offer. If we look at the current Buffet plan, 90% of the 350 billion dollars in Medicare will be squeezed out of drug companies, hospitals, and health companies, which is hurting a large industry. On the other hand, when taxes were lower, the number of jobs increased by an average of 3% as opposed to years when taxes were above the average tax rate of Americans. When private sector investments exceeded 630 billion a year, the overall GDP went up by 3%; the economy was declared “booming” by Mark Zandi and JP Morgan.

4. Assertion: Lowering taxes will help people get back on their feet

Reasoning/Evidence: Having more taxes may have some social benefits, but as our economy is so bad, we need to lower taxes to help people get back on their feet. Right now, the unemployment rate is at a skyrocketing 9.1% according to the US Bureau of Labor Statistics, April 2012. According to NewEconomicPrediction.org, over 20 million people not included in the unemployment count are not only unemployed, but have given up looking for work. This dichotomy is furthered by crippling tax rates such as the forthcoming Buffet plan and the Californian tax plan presented by our governor.


Assertions #5, 6, 7, 8

CON (5 assertions)

Value:

Social Benefits

Weighing mechanism:

Whichever side can prove that their side is the best for society as a whole will win this debate.

Define:
Taxes - the price citizens of a country pay for the goods and services they collectively provide for themselves and for each other.

1. Assertion: Government health programs are more extensive

Reasoning/Evidence: We examine 50 indicators that are commonly used to measure a country’s social progress. On over half of these indicators (29), the outcomes in high-tax Nordic countries (Sweden, Norway, etc.) are significantly better than those in low-tax Anglo-American countries (US, Britain, France, Australia).

Infant mortality rates are significantly lower and life expectancy is longer in countries with higher taxes; homicide rates are lower in Nordic countries; There is less drug use, environmental performance is higher. In fact, Japan has the longest life expectancy, and the average income tax is 42%, 28% higher than what the top 1% of Americans are paying


2. Assertion: There is greater social equality with higher taxes

Reasoning/Evidence: Nordic workers have significantly more economic security. Income is distributed more equally in Nordic countries. Nordic countries have significantly lower rates of poverty across almost all social group. The elderly have higher pension income and replacement rates in Nordic countries. The income received by those with disabilities relative to the population is much higher.

3. Assertion: Education is better with higher taxes

A greater percentage of the population has completed secondary school and university in Nordic countries.

4. Assertion: The debt/GDP ratio is lopsided, resulting in fewer investments into American economy; only taxes can fix this and spur economic growth

Reasoning/Evidence: A recent analysis by J.P. Morgan Chase & Co. highlighted research that shows “when debt ratios in the U.S. and in other advanced economies have exceeded 90%, economic growth suffered notably.” Without further progress on deficit reduction, the U.S. will fall off that 90% cliff in less than a decade.

Right now, the US GDP growth is hindered by the debt ratio and the unstable economy. The US economy has long depended on foreign investors to sustain its spending and production.

The Buffet Rule, according to Peter Diamond, will increase revenue by 1 percent of GDP by increasing taxes of the top 1% to 30%. If we raise it to 43.5 %, it will increase GDP by 3%. Right now, we should be focusing on our debt to GDP ratio. By taxing the 1%, we will be effectively reducing debt, increasing GDP, and thus increasing investments from the private sector.

Peter Diamond, Nobel Laureate in Economics, Professor at MIT, Emmanuel Saez, Professor at Berkeley

For example, setting aside behavioral responses for a moment, increasing the average tax rate on the top percentile from 22.4 percent (as of 2007) to 29.4 percent would raise revenue by 1 percentage point of GDP. tax rate of the top percentile to 43.5 percent, which would be sufficient to raise revenue by 3 percentage points of GDP, would still leave the after-tax income share of the top percentile more than twice as high as in 1970.


Assertions #5