Should governments tax the rich to get out of debt?

1. Should governments tax the rich to get out of debt?

2. A rich idea! • A number of billionaires have suggested that it is time the wealthy paid their share of the dues. • Governments in Europe and the United States are running out of options to plug gaping deficits and calm jittery markets. • Billionaire investor Warren Buffett in the New York Times said, “My friends and I have been coddled long enough by a billionaire-friendly Congress,” • Here was the third-richest man in the world talking up something everyone could grasp: taxing the rich. • In France, Maurice Lévy said it was time France’s wealthiest “participated in the nation’s effort”.

3. Types of Taxes

4. Progressive • A taxation structure which progressively increases the percentage of a citizen's income (or wealth) which is paid in tax as income (or wealth) increases. • The consequence should be that the more well off are taxed at a higher rate than are the less well off. • Supporters of a Progressive tax argue that it would sharply reduce income inequality by raising the taxes on the wealthy. Salary = $100 Tax paid = 10% Salary = $500,000 Tax paid = 35%

5. Proportional • A tax system in which the tax collected is in constant proportion to the income being taxed, i.e. as income rises so tax rises proportionately. • A proportional tax is often referred to as a "flat tax" because every person pays the same percent of their income in taxes.  Salary = $100 Tax paid = 10% Salary = $500,000 Tax paid = 10%

6. Regressive • A tax structure which requires the more well-off to pay a lower percentage of their income (or wealth) in tax than a less well-off citizen. • The consequence is that the more well-off citizen pays a smaller percentage of their income to cover the tax on a new refrigerator than does a less well-off person. Salary = $50 Pays $5 for gas = 10% of income Salary = $500 Pays $5 for gas = 1% of income

7. Categories of taxes on income in France Corporation tax: Corporation tax is a tax, in principle payable annually, on all profits generated in France by companies and other legal entities. It concerns about a third of French companies. Personalincometax: Personal income tax is in principle a comprehensive tax levied on an individual's total income in a given year.

8. Categories of taxes on income in France Social levies : In order to tackle social security funding problems and ensure that all income helps to finance social protection, supplementary levies of a tax nature were introduced Payroll taxes :The main payroll taxes are the wage tax, the apprenticeship tax and employers' contributions to the development of continuous vocational training and to construction. Retail sales growth slows as higher payroll tax resumes

9. Factors that influence total tax revenues Oil prices & other costs – affect business profits Changes in the real incomes of people in work The tax base – how many things the government taxes Asset prices – e.g. changes in share and house prices Rate of economic growth and the rate of inflation Level of employment and unemployment Factors that influence total tax revenues