Preparation : 20 minutes
Oral exam : 20 minutes, 10 minutes to answer the question, and 10 minutes for discussion.
Using the document and your knowledge, make a structured answer of the following question.
Subject n°10 :
|
The
French government is planning an income tax cut.
To what extent is such a cut in taxes relevant (or efficient)? |
A Tax Cut...The Washington Post, July 20, 1999
William G. Gale,
Senior Fellow, Economic
Studies
Rep. Bill Archer (R-Tex.) has long been an eloquent and impassioned advocate of lower taxes and smaller government. (…) Mr. Archer correctly notes that aggregate federal tax revenues are the highest they have been since World War II. Then, however, he goes on to claim that the typical American family pays 38 percent of its income in taxes. This figure, based on a Tax Foundation calculation, actually refers to the typical two-earner family, which has substantially more income and therefore a higher average tax burden, than the typical family. (…)
Data from the Congressional Budget Office and the Treasury Department consistently show that Americans at most points in the income distribution are paying less in federal taxes in 1999 than they would have with similar income over the past 20 to 30 years, (…). Aggregate tax revenues have increased largely because higher-income households, which face higher tax rates, have experienced large increases in income in recent years.
Archer claims that "broad-based tax relief is the answer." George Orwell would be proud. The tax cuts Archer is advocating would do next to nothing for typical households and would instead concentrate tax cuts on the wealthy.(…)
Truly broad-based tax relief would focus on the three-quarters of taxpayers who pay more in payroll taxes than income taxes. Significant relief could be provided via a refundable income tax credit for payroll taxes, but Archer has vociferously opposed such ideas in the recent past and has even sought to cut back on the earned-income credit. (…)
Archer overlooks an equally important debate: that between fiscally responsible and irresponsible government. Our future Social Security and Medicare obligations did not rain down like manna from heaven; they were legislated by Congresses and signed into law by presidents. The real concern should be focused on those politicians of short foresight who are willing to promise massive future benefits to voters but are unwilling to live with the taxes needed to pay for them.
Archer is surely correct about two things, but draws the wrong conclusions. First, the nation is enjoying a rare combination of good fortune: a strong economy, a short-term budget surplus and the lowest tax burdens on most households in at least two decades. But if we cannot address our long-term imbalance in Social Security and Medicare under these conditions of strength, and before the baby boomers retire, it is difficult to see how these problems will ever be addressed.
(…)
© Copyright 1999 The Washington Post Co.