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SHOULD THE WEALTHY BE TAXED MORE?

Should the Wealthy Be Taxed More? Annotated Bibliography


Dalton Behie
October 30 2015
James Madison University

SHOULD THE WEALTHY BE TAXED MORE?

Introduction:
America today has begun to fall into an economic recession. As a result, the government
is now toying with new economic strategies to solve this crisis. The idea of increasing
taxes on the upper-class, and redistributing the wealth among the other economic classes,
is growing increasingly popular. Many Americans, however, resist this rising economic
ideology, fearing that it will only cause further damage. It is imperative that we research
this strategy and build our own opinions on the topic. As a college student, this is
especially imperative for me and my fellow peers across America. I have done my own
research on this topic, and have come to the conclusion that this policy will indeed be bad
for our country.

SHOULD THE WEALTHY BE TAXED MORE?

United States Department of Labor, Bureau of Labor Statistics. (2015, October 25).
Databases, tables, and calculators by subject, October 2015. Retrieved from
http://data.bls.gov/timeseries/LNS11300000
The government website for the United States Bureau of Labor statistics has been an
important reference website for my research. The website is full of information pertaining
to the success of the economy. It includes graphs and stats about various topics, including
unemployment rates, and informational pages about anything from inflation rates to the
average employment wages.
The most useful peace of information that this website had to offer, was the labor
force participation rate. The labor force participation rate shows the percentage of
Americans who are employed and actively contributing to the work force. This is
important because the unemployment rate itself, does not include those who are on
government subsidies, such as welfare, who are technically not actively working.
This graph alone was not quite enough to draw analysis from, but it was a very
useful reference when combined with other sources. For example, in the graph, we see a
major drop in labor force participation under the Obama administration (from 66% 62%). The Bureau of Labor Statistics itself offers no connection between the Obama
administration and the drop in labor force participation, but this is why the next source
comes in handy.

Americans for Tax Reform. (2013). Full List of Obama Tax Hikes, October 2015.
Retrieved from http://www.atr.org/full-list-ACA-tax-hikes-a6996

SHOULD THE WEALTHY BE TAXED MORE?

This website was created by the organization, Americans for Tax Reform, and this
page is a full list of times Obama has caused increases in taxes, and what the tax increase
was for. Many of these taxes were placed on the upper class, such as the Obama Surtax on
Investment Income, added an extra 3.8% income tax on the upper-class, as well as the
Obamacare Hike in Medical Payroll Tax and the Obamacare Excise Tax on
Comprehensive Health Insurance Plans.
The majority of these tax hikes were placed on the upperclass, businesses, and investors. The money the government acquired
in these tax hikes was usually used to fund entitlement programs such
as health care, welfare and food stamps. The Bureau of Labor Statistics
shows that, despite Obamas method of adding extra taxes on the rich
the economy has hardly benefited. Labor force participation has now
gone down an entire 4%. This means another 4% of Americans are nolonger working. This is easily the fastest and most drastic drop since the
Great Depression.

The Library of Congress, THOMAS. Bill Summary & Status 99th Congress (1985 1986),
October 2015. Retrieved from http://thomas.loc.gov/cgibin/bdquery/z?
d099:SN01200:@@@L&summ2=m&|TOM:/bss/d099query.html
In contrast to todays liberal ideology of adding taxes on the rich, President Ronald
Reagan is known for how he subscribed to a different ideology. Supply-side economics, or
Reaganomics, is the strategy of cutting taxes, to relieve stress on the upper-class. In

SHOULD THE WEALTHY BE TAXED MORE?

turn, this was supposed to allow businesses to thrive and expand, creating more jobs. I
believe this strategy has been proven to be much better.
In order to make supply-side economics look bad, people have claimed that Reagan
did not actually cut taxes as much as people believe he did. Supporters of the more
socialist strategies have pointed out that Reagan actually increased taxes eleven times.
This source is very useful.
The library of congress website is a government website that keeps a record of all
government legislation. This particular page covers the highlights of the Reagan
administration, listing the legislation that was past, and giving descriptions of what the
legislation did. Using this as a reference, we can see that, while Reagan did increase taxes
eleven times, these were very insignificant compared to bills such as the Economic
Recovery Act of 1981 or the Tax Reform Act of 1986, bringing the lowest tax rates on
corporate income in any major country in the world.
Once again, when compared with the Bureau of Labor Statistics website, we can see
the drastic results. This period brought the fastest increase in economic growth and labor
force participation in American history. Labor force participation also reached its highest
point, peaking at almost 67%. As far as economic growth and job creation go, it seems
Reagans strategies were quite effective.

Sowell, T. (2014). You Cant Tax the Rich, October 2015. Retrieved from
http://ic.galegroup.com/ic/ovic/ViewpointsDetailsPage/ViewpointsDetailsWindow?
failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&displ
ay-

SHOULD THE WEALTHY BE TAXED MORE?

query=&mode=view&displayGroupName=Viewpoints&limiter=&u=viva_jmu&currPag
e=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_resu
lts=&p=OVIC&action=e&catId=&activityType=&scanId=&documentId=GALE|
EJ3010889214
The next two sources are both scholarly articles that take educated standpoints
against the socialist economic policies of today. This first article is titled You Cant Tax
the Rich, and it is written by Thomas Sowell, a fellow at the Hoover Institution.
This has been a valuable source for me in my research. Sowell has studied the
history of American economic policies and come to the same conclusion. Sowell
discusses how in the 1920s, America tried to enact the same policies of taxing the rich.
Sowell said, The number of people with taxable incomes of $300,000 a year or more
equivalent to far more than $1 million in today's moneydeclined from over 1,000
people in 1916 to fewer than 300 in 1921. Sowell then points out how, these tax
increases on the upper-class were ineffective, saying: Secretary Mellon estimated
that the amount of money invested in tax-exempt securities had nearly
tripled in a decade. The amount of this money that the tax collector
couldn't touch was larger than the federal government's annual budget
and nearly half as large as the national debt. Big bucks went into
hiding.
Sowells article was written just last year in 2014. He draws
several connections between the ideologies of the early 1920s, to the
ideology that is starting to become prevalent in modern society. He

SHOULD THE WEALTHY BE TAXED MORE?

urges us not to allow history to repeat itself. Sowells article is backed


up by numerous scholarly sources, making it all the more useful.

Dubay, C. S. (2014). The Rich Should Not Pay Higher Taxes, October 2015. Retrieved
from http://ic.galegroup.com/ic/ovic/ViewpointsDetailsPage/ViewpointsDetailsWindow?
failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&displa
yquery=&mode=view&displayGroupName=Viewpoints&limiter=&u=viva_jmu&currPage
=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_results
=&p=OVIC&action=e&catId=&activityType=&scanId=&documentId=GALE|
EJ3010889203
This is an article written just this year by Curtis S. Dubay, senior analyst in tax
policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage
Foundation. This article provides the strongest arguments for my position on this topic.
Dubay opens his article by introducing the issue at hand. He discusses the Obama
administrations tax strategies, giving a list of Obama administration tax hikes on the
upper class. He then lists a series of arguments that support this tax policy, debunking
them one by one. His arguments are supported by facts and strong scholarly sources. For
example, the first myth he debunks is that raising taxes on the rich will close budget
deficits, to which he argues that the opposite is true, saying: In 2006, the latest year of
available data, there was $2.2 trillion of taxable income for taxpayers earning more than
$200,000. Assuming the amount of income at that level is similar this year, Congress
would need to tax 80 percent of that income in order to close the projected $1.8 trillion

SHOULD THE WEALTHY BE TAXED MORE?

deficit. Tax rates at such levels would significantly decrease economic activity and
taxpayers would likely avoid or evade paying them so the revenue gains would likely
never materialize.
He then goes on to defend the supply-side economics policy, in which tax cuts are
essential. He debunks the argument that the Bush tax cuts of the early 2000s did not
generate strong economic growth, saying: The passage of [the 2003 tax cuts]
started a different story. In the first quarter of that year, real GDP [Gross
Domestic Product] grew at a pedestrian 1.2 percent. In the second
quarter, during which [the 2003 cuts were] signed into law, economic
growth jumped to 3.5 percent, the fastest growth since the previous
decade. In the third quarter, the rate of growth jumped again to an
astounding 7.5 percent [Foster, 2008].
Dubay closes by explaining how facts have often been corrupted
and altered to further the agenda of those in power. I can use this
article to show how raising taxes on the rich is a dangerous policy for
America to have, as we plunge deeper into this economic recession.