Obama's 30% millionaire tax

President Obama said that millionaires and billionaires have to be the minimum “fair share” to pay in taxes. It has to be at least 30 percent of their income. Also Obama said that people who earn more than $ 1 million a year should not pay less than 30 percent in taxes. The 30 percent marker is the first real detail Obama has offered since proposing the so-called Buffett Rule last September. That rule is a guideline intended to ensure that the very wealthy do not pay a lower percentage of their income in taxes than anyone in the middle class. The congressional research service estimated that a quarter of millionaires do not pay enough in federal taxes for satisfying the Buffet Rule. The CRS arrived at the number after considering what filers pay in federal income, payroll and corporate taxes combined. Obama also asserted to stop tax deductions for millionaires on home, health care, retirement and child care. Most of people do not support this rule, because they don’t like to pay taxes.

Price controls; Minimums and Maximums

The government sets the price of free market for society in general in order to achieve a different outcome. It calls Price controls. There are two types of Price controls which are Maximum (low) price controls and Minimum (high) price controls. Maximum price control is that the government sets a maximum price under the equilibrium price in order to attempt to prevent the market price from rising above a certain level. And so producers cannot raise the price and it has to be set below the free market price. It usually apply to agricultural products and food markets during shortages or the price for renting the house in order to stabilize the life for poor people. This can be kind of welfare system. Conversely, Minimum price control is that the government sets price above the equilibrium price in order to prevent reducing the price and increase the revenue of the producers.

Taxes and Subsidies

A tax is an amount of money that you have to pay to the government so that it can pay for public services. The main purpose of taxation is to accumulate funds for the functioning of the government machineries.

Other purposes of taxation:     -   Improvement in services of the government.

-       Improve employment at all industry verticals.

-       Induction of modern technology in to the system.

-       Rationalization of terms and condition of the economic system.

-       Rationalization of employment terms and conditions.

The advantages of tax

-People are taxed based on total income, thus people who make less theoretically pay less tax on earnings.

-Not all people consume at the same rate, therefore tax on earnings is a more equitable way of assessing tax than with a consumption tax.

-People with lower incomes would be the most impacted by a straight tax on consumption, since even necessary items like cars would be significantly more expensive.

-Income is an easier way to levy taxes and decide deductions. While people may deal with a few pay stubs they have to save, in consumption tax, people might have to save receipts for every purchase they made during a year in order to qualify for tax breaks.

The disadvantages of tax

-Discourage Business: people have to pay more of their income to the government.

-Penalize hard work: high taxes can stifle the motivation of individual workers. Also the macroeconomic problems that high taxes can precipitate, an onerous tax scheme can have the effect of penalizing hard work.

-Increase government control: When a government collects more in tax revenues, it accumulates more money to spend. This increase in discretionary income, compared with the money available to the citizens and businesses of the country, causes a shift in power away from the people towards the government

A subsidy is money that is paid by a government in order to help an industry, business and company.

The advantages of subsidy

-Supply more

-Decrease the price

-Increase employments

-Control the rate of inflation

-Increase the revenue

The disadvantages of subsidy

-Higher taxes

-Encourage inefficiency among producers

-Decrease the price (not good for free markets)

   

New IRS Tax Gap Report: Cheating Still Rampant

In 2006, Americans underpaid their taxes by $450 billion that was a lot of money; equal to a 17% noncompliance rate. Also it means that wage earners who are paying their fair share are paiying up more to compensate for the tax cheats out there. The IRS put out information on enforcement efforts to close the tax gap that are just getting underway. Americans underpaid their taxes by $450 billion in 2006. A crackdown on unscrupulous tax return preparers; this is part of a multi-year strategy to register all paid return preparers. But the major push is for more third-party information reporting. Compliance is the highest where there is third party reporting. As a result, a net of only 1 percent of wage and salary income was misreported. Stock brokers and mutual fund companies will be required to report costs basis information on stocks and mutual funds to investors and the IRS (no fudging your capital gains taxes). Similarly, new merchant card reporting requirements established this year should make it easier for the IRS to spot businesses that are either under-reporting receipts or not reporting at all. And new reporting requirements for a U.S. individual with financial accounts oversees will help the IRS keep an eye out for offshore tax avoidance. Despite all the complaints from the business community about information reporting, it’s a friendlier way to combat the tax gap than through increased enforcement efforts

Who Counts as 'Rich'?

Who counts as rich? We can see plenty of times about distribution of income in the United States, and how many rich people don’t realize they are rich, at least relative to the rest of the country. However now Americans had curious about who counts rich. Gallup has surveyed Americans to ask what they believe the cutoff for being “rich” should be. The response was that a person would need to make at least $150000 to be considered rich. However the typical American believes anyone in about the top tenth of the income distribution counts as “rich.” On the other hand, president Obama and others have set the cutoff around $250000 when discussing raising taxes on the rich. From response to Gallup’s survey on threshold for being rich varied tremendously by demographics and geography; men cited a higher bar than women did; $150000 VERSUS 410000 respectively. Also children under 18 said they would require $200000 before considering themselves rich, whereas the childless were satisfied with a $100000 benchmark. For clearly, people who live in urban areas such as New York City, where the cost of living is higher or in suburbs had higher standards for being rich than did Americans who live in towns or rural settings.

Oil's up, Gas is down

Nowadays, in U.S. oil prices over the past few weeks have received a pleasant surprise at the pump. However while oil prices have increased, retail gasoline is moving in the opposite direction. The moves may seem counter-intuitive, since crude oil is used to produce gas. But while the two are closely related, there are a number of factors that can push their prices apart in the short term. Retail gasoline is more expensive than crude oil, because of taxes, distribution and the refining process. Oil and gas have always moved together with gas prices following on oil moves. They do face different supply and demand forces, but sometimes pulled in opposite directions. Gasoline is not the only product for which crude oil is used. Just 42% of gasoline among every barrel of crude oil produced used for crude oil in U.S. The rest was divided among other products including diesel, jet fuel and consumer goods for tires and link. Demand for these products also goes some way to shaping oil prices. Diesel, in demand as a generator of electricity in the developing world, has become more expensive in recent months.

College graduation rates: Income really matters

It's getting more difficult for low-income students to climb the economic ladder as the college graduation gap between the rich and poor grows. While more students from all backgrounds are finishing college, the difference in graduation rates between the top and bottom income groups has widened by nearly 50% over two decades. Also nowadays, education is the most important thing of upward mobility, which means that it’s even more harder for low-income(poor)people to prosper. As follow the some survey, it is recorded that only 9 percent low-income people get college diplomas. From this survey, wealthy made great gains in graduation rates. Why children from low-income backgrounds don't make it through college? One reason from researchers that poor people usually go to lower tier school. Another reason is that their parents don't have the financial means to aid their children. People said that this is a kind of important problem,  because poor people usually does not persist to graduation and this is hard for them to find future. In addition, this would cause to them to discourage and drop out. Today, A lot of better paying jobs require more education and skills that employees can only get in college. This can be problem for policy makers, because they should make programs to promote and protect for poor people to attend and complete college. This includes expanding tuition assistance for poorer children to give them a better shot at future financial security.