The signs of high taxation are already there. Hillary Clinton, the Democratic presidential nominee, has promised that in the case of her ascending the presidency, fair taxes will be imposed on super-rich, Wall Street and the corporations. This idea of high taxes to make the wealthiest Americans pay their just dues which they avoided all along by shortchanging the system has gained traction at times of great inequality between the rich and the poor. Indeed, about 63 percent of those polled by Gallup said that there is an unfair distribution of wealth and money. More than 50 percent said that higher taxes must be imposed on the rich.
According to Emmanuel Saez, a professor at Berkeley, it is about time that American Government pushes up the top rate of tax. The present top tax rate stands at 39.6 percent, a much lower amount than 70 percent which was in place in the 1930 to 1970 time period. Wealth was also much more evenly distributed at that time. It is clearly seen that if econiomic equality is to be achieved, then it is an excellent idea to tweak tax rates.
The problem is that taxation continues to be a contested issue in the modern political conversation. Plenty of people can put forward the argument that higher taxes could actually harm the economy. They say that the rich could simply move the money to offshore accounts where they cannot be tracked. It means less revenue for government and also government services. If money is not being made by the wealthy, then there could be a reduction in the economic activity. Lesser amount of capital will be available for entreprenuers, and the scenario will lead to fewer jobs and lower business formation rates. The net result would be bad for the economy, and will particularly hit the low wage earners.
Reality says otherwise. It is seen that these are just conjectures which may never come to pass. The American economy is now much less entrepreneurial over the course of time, implying that the rich is not creating any new businesses with extra money which at one time used to go to the tax man. Another point for higher tax is that it is seen that people actually do not move money out of the country if there is heavy taxation. History also says that increasing the top tax rates leads to inequality reduction.