Why not just reduce taxes for poorer people

Discussion in 'Economics' started by morganist, Jan 10, 2010.

  1. poorer people are financially helped by the gov, so why are they taxed surely if they are taxed then given money back it is self defeating. why didn't govs instead of borrowing to increase aggregate demand reduce tax for low income earners who were then helped with the fiscal stimulus. the money would not have been taken from them in the first place necessitating gov help. also we would not owe money. is it just to maintain the power of the government.

    is this not obvious. it is however still a viable option. reduce tax for poorer people and aggregate demand will increase instead of gov stim. this would reduce the need for gov help as people would have more money due to not having to pay so much tax.
  2. Liger86


    Why not eliminate taxes on anyone who makes 10k or under? It's not like there is much revenue in there anyway.

    Eliminate the taxes on poor and just balance the books to make up for the lost revenue.

    Iknow, will never happen. Worth the post though.
  3. The problem with government is that their actions are driven politically.

    Inaction is a way to play safe, especially when managing an organization as large as a government, any small action could cause huge consequences.

    If the government decided to tax the poor less, there aren't many options that are possible in an administrative sense. The government may have to change or even add to the currently existing administrative process(eg. separate and review tax returns of low income individuals vs. review the applications for tax rebate), which could be costly and could subject themselves to attack by other political parties.

    The government could lower sales tax which may help the poor people, but the problem is that the government need the money too, especially in this recessionary period.
  4. why not surely this would be an ideal way out of this. the poorer people are better off, aggregate demand increases and there is not expense to the government so the lost income from it is provided by not having as much to pay out. the only downside if you call it that is the gov part is taken out.

    this is ideal and may be the only option.
  5. Logic


    People who make less than 25k (I'm unsure of the exact divider) already don't pay income taxes.

    What defines poor?
  6. would not a reduction in the lower tax bracket do the desired result. they are all audited anyway so it would help. it is to me the logical answer. the gov needs tax for the poor so if they tax them less they need less. i do get your point but i think it is doable at least in england.
  7. people who receive gov help. that way the tax reduction is offset by the low cost.
  8. Liger86


    Poor is when you can't feed your kids.
  9. ok lets look at the cons so far.

    pension admin says the operation of practice. the cost and limitations of reductions.

    and logic says the allocation of the tax reductions and how to describe poor.

    both of those are good arguments. however i think they are both resolvable.

    are there any other cons.
  10. wutang


    I'd define poor as having little to no money to save after all basic necessary expenses are paid each month(rent, food, student loans, etc.).
    #10     Jan 10, 2010