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TAXATION AND INCOME DISTRIBUTION.
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Relationship between the two.... More...
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Paper Abstract:
Relationship between the two. Taxation theory, policies and objectives including income distribution. Different segments comprising an economy. Social activist context of income distribution. Focus on wealthy-poor matrix. Direct effects. The welfare mix and interrelatedness of social orders: public, private, for=profit, nonprofit, formal, informal. U.S. tax structure. Reform measures.
Paper Introduction:
TAXATION AND INCOME DISTRIBUTION
Introduction
The purpose of this research is to investigate the relationships between taxation and income distribution. There exist strong interrelationships among taxation theories, models of taxation, and taxation policies. Taxation theory provides a basis for the development of models for taxation systems. Taxation policies reflect the emphases in the implementation and functioning of taxation systems. Taxation policies develop in relation to a multitude of objectives, one of which is income distribution (McNulty, 2000).
Income distribution refers to the proportional share of economic benefits received by the different segments comprising an economy. The definition of segments tends to shift (based on the perspective o
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(1999, June). Tax planners are interested in incomedistribution according to population-income quintiles. (2 2, August). M. Households are normally informal, private non-profitorganizations, while voluntary associations are normally formal, privatenon-profit organizations. Each of these institutions illustrates a uniquecombination of characteristics. Tax systems in European Union countries. Inthe pre-1973 period in the United States, a tacit social contractdeveloped, wherein capital, at least in the large and successful corporatesector, accepted collective bargaining, and provided a regime of highwages, employment, and fringe benefits and labor accepted managerialprerogatives in the organization of work and largely refrained from strikes(Razin, Sadka, & Swagel, 2 2). The above described changes led to the development of three essentialsocietal stances toward the linking of taxation and income distribution.These stances, for lack of better designations, were the conservative, theliberal, and the radical positions on the issue. After 1973 in the United States, however, actual and perceivedfailures of the welfare system, a relatively hard shift to the right in thepolitical leanings of the American population, the ascendancy of theSouthern states as the locus of national political control of the federalgovernment, and the balkanization of the progressive movement in the UnitedStates led to increasing demands for tax reductions, on the one side of thetransfer payment equation, and even more stringent reductions in incomedistribution objectives, on the other side of the equation. The social institutionsnormally associated with these four social orders are households, privatefirms, public agencies, and voluntary associations or non-profitorganizations, respectively. Further, the radicalposition is that those individuals caught in the secondary market canseldom ever hope to make the transition to the primary labor market. Whileradicals tend to support social assistance programs, they also contend thatmost such programs in the United States tend to provide greater benefitsfor the well off than they do for the poor. Income distribution refers to the proportional share of economicbenefits received by the different segments comprising an economy. There exist stronginterrelationships among taxation theories, models of taxation, andtaxation policies. H. (2 2, Winter). The radical position on incomedistribution is that both conservatives and liberals place the blame on thepoor for being poor. In theUnited States, New Deal liberals in the 193 s believed in a form of thesame vision. Applied Economics, 31(11), 1373-1383.Linhorst, D. Social Service Review, 76(1), 83-1 8.Gorz, A. Some of the more significant provisions of PL 1 4-193 (1996) were as follows: < Ended cash assistance to the parents of children in the lowest income households < Transferred substantial power to the states to develop and implement further welfare reforms < Continued the Medicaid program for children in the lowest income households < Continued funding for child care for children in the lowest income households < Mandated more strict nationally-assisted enforcement of child support payments by non-custodial parents < Denied most welfare benefits to all non-citizens-both legal and illegal immigrants < Limited the duration of most welfare payments to a maximum of 24 consecutive months and a lifetime maximum of 6 months in total < Provided for block grant funds to be distributed to the states for temporary assistance for needy families (TANF) to replace Title IV-A of the Social Security Act, which provided assistance through the AFDC program The result of the reform of the link between taxation and incomedistribution in the United States in the mid -199 s was (a) most of thepoor people became better off as paid employees, while the better offmembers of society, because of lower taxation prospered even more andcreated new jobs or (b) most poor people are worse off than before reform,the unemployment rate increased, and the most well off Americans receivedhuge federal tax reductions. Social Work, 47(3), 2 7-214.McNulty, J. Although it does not excludepublic financing, neither does it mean that such provision can be equatedwith the motives of for-profit organizations (Glennerster, 2 2). Further, government would fund housing projects, theSocial Security system, educational programs, welfare programs, andprograms to create jobs (Novkov, 2 1). The use the mechanism of transfer payments to link taxation and incomedistribution is integral to the concept of the welfare state. (2 2, June). The interrelatedness of these social orders involves differencesbetween public and private, for-profit and non-profit, and formal andinformal institutions. Taxation theory provides a basis for the development ofmodels for taxation systems. (2 2, July). (2 2, December). Journal of Economic Issues, 36(2), 415-421.Glennerster, H. Reclaiming work: Beyond the wage-based society. Indirect effects involve the collection of funds throughthe taxation of economically better off members of society and the use ofthose funds in job creation programs, retraining programs, and so forth(Joumard, 2 2). Flat tax, consumption tax, consumption- type income tax proposals in the United States: A tax policy discussion of fundamental tax reform. With respect to the liberals, the radicalposition is that, while the liberals are willing to provide some relief forthe poor, they are not willing to acknowledge that the problem lies in adefective economic system, and that without such acknowledgment effectivelong-term solutions to the poverty problem cannot be developed. United States poverty studies and poverty measurement: the past twenty-five years. The radicals also supportincome equalization polices and an end to all tax benefits (Gorz, 1999). The radical position says, in effect, to the conservatives andliberals "a pox on both your houses". Market and public policy mechanisms in poverty reduction: The differential effects on property crime. California Law Review, 88(6), 2 95-2184.Novkov, J. The French revolution had abolished feudal privileges andestablished certain basic human rights. Income differences, according to this conservativeposition, stem more from individual preferences than they do from bias inthe income distribution system. (1999). One of the centralfeatures of PL 1 4-193 was a set of provisions designed to move welfarebeneficiaries from the welfare rolls to paid employment - preferably in theprivate sector. (1999, November). Cambridge, England: Polity Press.Joumard, I. Journal of Political Economy, 11 (4), 9 -918. Presidential Studies Quarterly, 32(4), 647-663.Clark, C. Direct effects occur when the income transfer involves the collectionof funds through the taxation of economically better off members of societyand the redistribution of those funds to less well off members of societythrough mechanisms such as welfare payments, income supplements, rentsubsidies, negative income tax payments, and so forth (LeBlanc, Hrubovcak,& Durst, 1999). Across the United States, some business firms - from largecorporations to small businesses - joined the effort to move welfarerecipients to paid work. Thesystem, according to the radical position, contains both a primary andsecondary labor markets, and the secondary labor market provides itsparticipants with poverty-level income levels. taxation and income distribution Introduction The purpose of this research is to investigate the relationshipsbetween taxation and income distribution. The liberal position contends thatprogressive tax systems in the past have failed to improve the lot of thepoor largely because benefits for wealthy individuals are built into thetax code, and that, in turn these benefits result in higher rates oftaxation for the poor than for the wealthy. The aging population and the size of the welfare state. Social activists are more apt to be concerned withthe distribution of income between the wealthy and the poor, white and non-white, and male and female. Review of Social Economy, 57(2) 156-164.Cameron, C. Changing fiscal federalism in the United States: Effects on agriculture and food consumption. C., & Stone, J. The ascendancy of the conservative position in this debate in theUnited States was marked by the passage by a Republican-controlled Congressand the signing into law by a Democratic President of the PersonalResponsibility and Work Opportunity Reconciliation Act (PL 1 4-193), moregenerally known as the Welfare Reform Law, in 1996. The liberal position is that a progressive tax structure (as opposedto a flat rate structure) is required if the economically less fortunate inthe society are to be able to receive minimally acceptable levels of theeconomic fruits of the national income. The welfare mix pertains to theinterrelatedness of these social orders and institutions (Glennerster,2 2). In Western Europe, the vision heldthat the social contract would be implemented through the state. OECD Economic Studies, 91-153.LeBlanc, M., Hrubovcak, J., & Durst, R. (2 , December). Thedefinition of segments tends to shift (based on the perspective of theexamination), and the composition of segments tends overlap as theperspective changes. The Relationship between Taxation and Income distribution For purposes of this current research, income distribution isconsidered within the social activist context, with a focus on the wealthy-poor matrix. A. M. Taxation policiesdevelop in relation to a multitude of objectives, one of which is incomedistribution (McNulty, 2 ). The liberal position alsocontends that an income distribution system, which for the last 5 yearshas provided the wealthiest 2 percent of Americans with over 4 percent ofthe total national income while providing the poorest 2 percent with lessthan five-percent of national income, is an inherently flawed system.Liberals, thus, tend to support social assistance for the economicallydeprived in society and to oppose flat rate tax structures and heavyreliance on sales taxes and user fees which tend to be far more severe forthe less wealthy (Linhorst, 2 2). Within domestic economies, economists oftendistinguish between the owners of capital and labor in considerations ofincome distribution. The radical position is that the conservatives arequite willing to let the poor starve rather than support an effectiveincome distribution policy. ReferencesAllen, R. Wealth and poverty: on the social creation of scarcity. For the moreobjective observer, the answer is found in the increasing numbers ofAmericans without health care insurance or access to Medicaid, theworsening financial plight of poor Americans, the steadily increasingunemployment rate, the continuing homelessness problem, and dramaticallyincreasing compensation levels for corporate senior executives. Studying the polarized presidency. Constituting workers, protecting women: Gender, law, and labor in the Progressive Era and New Deal years. The conservative position holds that income differentials in theAmerican society are the outcome of a system that rewards economicproductivity - either the actual producer or the owner of that whichcreates the production. Progressive politics first appeared at the beginning of the nineteenthcentury. Public agencies are normally formal, non-profit organizations, while private firms are normally formal, for-profitorganizations. Taxation policies reflect the emphases in theimplementation and functioning of taxation systems. PL 1 4-193. (2 2, March). The private non-profit alternative, as anexample, implies that the delivery of social welfare services does not takeplace under the auspices of public agencies. From this perspective, thus, theconservative views public policies designed to provide greater equity inincome distribution as both unjust and economically harmful. Washington: United States Government Printing Office.Razin, A., Sadka, E., & Swagel, P. K. For politicians, the answer the completion ofthe preceding sentence depends upon political orientation. M. The policiesare viewed as unjust because income is transferred from the producer to thenon-producer. (2 1). Industries would remain privately owned, but the federalgovernment would promote modernization and economic growth by buildingdams, highways, irrigation and electrification projects, and otherinfrastructure. The welfare state in the United States emerged largely through NewDeal and Great Society social legislation that guaranteed all Americancitizens entitlements to food, shelter, and other basic necessities. The welfarestate refers to the interaction of various social institutions and orders.The basic social orders are community, market, state, and associations.Each has its own guiding principles, predominant actors and resources,principal motives, and pay-offs for society. Ann Arbor, Michigan: University of Michigan Press.The Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Considered within this contextual framework, taxation hasboth direct and indirect effects on income distribution (Allen & Stone,1999). The development ofpublic policy regarding income distribution must accord consideration toeach of the various perspectives on the issue, while simultaneously,addressing the underlying political imperatives (Clark, 2 2). They are viewed as economically harmful because they sap theincentive of the producer to continue to produce, while they fail todevelop in the non-producer and incentive to become a producer.Conservatives, thus, tend to prefer flat rate tax structures, and tend tooppose social assistance for the economically deprived members of thesociety (Cameron, 2 2). Federalism and social justice: Implications for social work.
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