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In The Constitution Today It Delegates

By spenowork Nov 21, 2014 558 Words

In the constitution today it delegates the power of purse to the congress. The congress formulates and approves all tax laws. The tax bills emerge from all senate comities. The second largest revenue category social insurance includes the tax collected for social security and Medicare. The provisions of the United States Internal Revenue Code regarding income taxes and estate taxes have undergone significant changes under both Republican and Democratic administrations and Congresses since 1964. Since the Johnson Administration, the top marginal income tax rates have been reduced from 91% for the wealthiest Americans in 1963 to 39.6% (or in some cases 43.4%) for the same group by 2013 under the Obama Administration. Capital gains taxes have also decreased over the last several years, and have experienced a more punctuated evolution than income taxes as significant and frequent changes to these rates occurred from 1981 to 2011. Both estate and inheritance taxes have been steadily declining since the 1990s. Economic inequality in the United States has been steadily increasing since the 1980s as well and economists such as Paul Krugman, Joseph Stiglitz, and Peter Orszag, politicians like Barack Obama and Paul Ryan, and media entities have engaged in debates and accusations over the role of tax policy changes in perpetuating economic inequality. A 2011 Congressional Research Service report stated, "Changes in capital gains and dividends were the largest contributor to the increase in the overall income inequality. Much scholarly and popular literature exists on this topic with numerous works on both sides of the debate. The work of Emmanuel Saez, for example, has shed light on the role of American tax policy in aggregating wealth into the richest households in recent years while Thomas Sowell and Gary Becker maintain that education, globalization, and market forces are the root causes of income and overall economic inequality. The Revenue Act of 1964 and the "Bush Tax Cuts" coincide with the rising economic inequality in the United States both by socioeconomic class and race. With U.S. public debt rising as a percentage of GDP, reform of the personal and corporate income tax codes has been suggested as a solution to achieving the twin goals of deficit/debt reduction and higher rates of economic growth. Two important American economists have reached opposite conclusions on this issue. Martin Feldstein argues that the Tax Reform Act of 1986 "showed how a tax reform that includes lower rates can change incentives in a way that grows the tax base and produces extra revenue." Feldstein argues that the 1986 experience "showed an enormous rise in the taxes paid, particularly by those who experienced the greatest reductions in marginal tax rates." In view of today's budget shortfall, he suggests that the flattening of the tax code after the 1986 tax reform "implies that the combination of base-broadening and rate reduction would raise revenue equal to about 4 percent of the existing tax revenue," potentially "more than $500 billion in savings over the next ten years." One of the most commonly discussed issues in economics is how tax rates relate to economic growth. Advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. Others claim that if we reduce taxes, almost all of the benefits will go to the rich, as those are the ones who pay the most taxes. What does economic theory suggest about the relationship between economic growth and taxation?

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