IA (Eco) Tax Systems

[Atlasias]

Trying to write a macroeconomics IA on the following article: http://www.nytimes.com/2011/05/03/business/economy/03rates.html?ref=business

I'm thinking of talking about proportional, progressive and regressive tax systems, the fairness factor and maybe somehow involving the Laffer Curve. So anyone willing to help me with my points; that would be great. Remember I have to make it macro.

[Summer Glau]

I don't really think you need to talk about regressive tax systems since no country in the world uses that system and it's not really talked about in the article. If anything, talk about America's tax system - the progressive tax system which is discussed. Talk about the pros and cons of the system which are mentioned in the article, it does list a few of them. The article does talk about government debt as well which is a macro topic. You could talk about how the government may raise corporate taxes and the possible effects of that.

I didn't learn about the fairness factor or the Laffer Curve so I'm assuming those are HL topics? Go ahead and use them if you feel they are appropriate! Just remember that your limit is 750 words including diagrams

[Keel]

I don't really think you need to talk about regressive tax systems since no country in the world uses that system and it's not really talked about in the article. If anything, talk about America's tax system - the progressive tax system which is discussed. Talk about the pros and cons of the system which are mentioned in the article, it does list a few of them. The article does talk about government debt as well which is a macro topic. You could talk about how the government may raise corporate taxes and the possible effects of that.

I didn't learn about the fairness factor or the Laffer Curve so I'm assuming those are HL topics? Go ahead and use them if you feel they are appropriate! Just remember that your limit is 750 words including diagrams

I think you have to keep in mind that there are different type of taxes and to state that no country in the world uses such a system is a bit of an overstatement. For example, sales taxes or poll taxes are regressive in nature. To determine whether a tax is regressive or not the YED of the good being taxed and the distribution of wealth need to be considered.

Trying to write a macroeconomics IA on the following article: http://www.nytimes.com/2011/05/03/business/economy/03rates.html?ref=business

I'm thinking of talking about proportional, progressive and regressive tax systems, the fairness factor and maybe somehow involving the Laffer Curve. So anyone willing to help me with my points; that would be great. Remember I have to make it macro.

In my opinion, this is not a good article for the reasons: (a) it is from the New York Times; thus this article is in fact a commentary in itself and has done some of the analysis and evaluation for you. (b) Its a very long waffly article who's macro issue isn't explicit, why make your life difficult when you can find a simple article on inflation and stick several AD/AS diagrams in? The four macroeconomic objectives: low unemployment, low steady inflation, steady growth, positive balance of payments; the article does not explicitly relate to any of these.

If you insist on using this article then the main issue with this article is in the title, firms get richer despite high taxes , discuss. I don't think exploring the tax system is worth doing, not even the progressive nature of the tax or the American tax system. The point of a tax (whether progressive, regressive, proportional or flat), is that it is supposed to take money off you so you get poorer. But these firms are "paying less", so there is a problem. Why is it a problem? Taxation is a key fiscal tool in controlling inflation and growth. If the government can't manipulate the economy with taxes, it losses some control over the economy which could lead to severe consequences. Why is this happening? (a) tax evasion and (b) excessive government subsidy. What are the implications? (a) Worsen government deficit (b) Possible cause of inflation (not really mentioned in article which is a shame), diagrams: AD/AS or circular flow of income. Solutions: (a) increase tax, (b) prevent tax evasion (c.) cut subsidies. Evaluation: (a) Laffer curve / encourage further tax evasion (b) no matter how much the law is enforced tax evasion will always happen, plus the foreign company factor i.e. "accounting maneuvers" mentioned in the article. (c.) probably best solution, however lowers I and C thus lowering AD thus leading to lower growth and real GDP (AD/AS diagram).

[Summer Glau]

I don't really think you need to talk about regressive tax systems since no country in the world uses that system and it's not really talked about in the article. If anything, talk about America's tax system - the progressive tax system which is discussed. Talk about the pros and cons of the system which are mentioned in the article, it does list a few of them. The article does talk about government debt as well which is a macro topic. You could talk about how the government may raise corporate taxes and the possible effects of that.

I didn't learn about the fairness factor or the Laffer Curve so I'm assuming those are HL topics? Go ahead and use them if you feel they are appropriate! Just remember that your limit is 750 words including diagrams

I think you have to keep in mind that there are different type of taxes and to state that no country in the world uses such a system is a bit of an overstatement. For example, sales taxes or poll taxes are regressive in nature. To determine whether a tax is regressive or not the YED of the good being taxed and the distribution of wealth need to be considered.

You're right about that actually. Sorry, what I actually meant is that countries don't normally use regressive tax systems as a corporate tax system.

Anyways I do agree with Keel in that your article is very long and drifts off into a lot of different topics. It will be hard to stay within the word limit if you discuss everything. I would pick a simpler article where there's a bit less to talk about.