Effectiveness of Tax Cuts Business & Marketing Essay (Essay Sample)

Effectiveness of Tax Cuts
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Effectiveness of Tax Cuts
Are tax cuts effective?
Trade-off emerges when it comes to the question of the effectiveness of tax cuts. Tax cuts raise consumption due to high disposable income and increased investment by companies. Revenue collected from tax, which forms a big part of the government revenue. The argument that proponents of tax cuts put across are that it boosts spending, thereby improving the economy. In comparison, opposers argue that the rich are the ones who benefit from tax cuts as it can reduce the government’s ability to provide various services and remunerate lower-earning individuals. For this reason, this task offers an argument on whether tax cuts are effective or not.
Various tax systems rely on forms of taxes that help in the generation of revenue. Payroll tax and income tax from individuals are some of the largest sources of tax revenues since the two can generate an approximate of 86% of funds (Zidar, 2019). The tax systems levy individual income tax against capital gains, income, dividends, and interest, with higher taxes being imposed on more top earners. Comparatively, payroll tax refers to the fixed percentage tax levied on wages and salaries that reach a specific limit, and both the employee and the employer pay it equally. Several governments depend on payroll taxes as an integral source of funds. Payroll taxes have witnessed higher growth rates in recent years as compared to income taxes due to the raised limits of income and rates