Why the Government Needs to Lower Taxes: A Position Paper Essay Example

in giving the American people greater latitude to figure out an acceptable and effective way to allocate their resources, in view of the present financial turmoil. This proposal is anchored on the belief that giving the people more room to manage their resources, by lowering taxes, can prove to be beneficial for the economy in the long run.This paper shall not attempt to explicate key economic principles and theories as such.

The aim of this paper is to present the exigencies which may be taken as legitimate bases for adopting a taxation scheme which demands a significantly lower collection rate. In the ultimate analysis, what this paper stands for shall essentially exclude two other possibilities – (a) maintaining the status quo, and/or (b) increasing taxes all together. Reasons Why Taxes Need to be LoweredBefore proceeding with the identification of legitimate bases which justify the need to lower taxes, it may be insightful to state that this paper nowhere argues for the absolute or sweeping abrogation of all types of tax-schemes. It is needless to argue that taxes are essential for any given economy. They are monetary charges levied by authorities to institutions and persons, as well as activities and properties, for the sole purpose of funding “public expenses” which are essential to the operation of any country – namely, agriculture, education, healthcare, infrastructure, military and social services, among many others (Merriam-Webster 1208). But while the imposition of taxes ensures the basic operation of a country, an excess of collection imposed to the people may hurt the economy ultimately.

Which is why, this paper maintains that, at present, there is a need to lower taxes to help

keep the economy afloat.The first reason would be more logical than practical – i.e., lowering taxes gives the American people more resources to spend for their needs and wants, which in turn translates to an increased incidence of public consumption.

And as a matter of economic principle, the rate of public consumption determines, in part at least, the economic growth of a particular country. By right of logic therefore, it is certainly with good reasons to suppose that an increased incidence of public spending would help buoy the American economy. This logic makes sense insofar as the revenues which companies report depend largely on the manner by which consumers and/or clients respond to, and thereby buy or use their products. If one would remember, this is the reasoned premise which was conveniently presupposed by the “Economic Stimulus Package” implemented by the Bush’s Administration a few months ago. By giving the American public a sum of $600 – a sum which, on the surface, may not be that sizeable, but when taken collectively, represents a significant amount nevertheless – the people were given additional financial resources to spend for reasons left to their discretion.

Its ultimate goal was to stimulate the economy; and the government, all things considered, knew that the success of the package depends heavily on inviting people to spend the money. Now that many economists think that the economy may have already, or is currently slipping into recession, it is not without good reasons to suppose that the most viable way to avert the crisis is to increase public spending. The way to do this, it is needless to argue, is to lower

the taxes levied on the spending public.The second reason why the government needs to lower taxes is related to the first justification; this time however, the reason is more practical than logical. According to this proposal, the American public shall be accorded a considerable respite from heavy imposition of taxes on account of boosting public spending incidence. But instead of giving away another helping of “stimulus package”, the government can expedite the process by the immediate implementation of a lower tax-rate scheme.

In this way, the government does not anymore need to collect from the American public such taxes consistent with the presently mandated rate, only to appropriate back a portion of what was collected in the near future. Not only would this proposal save time, it also save the government some more resources by cutting on the cost the process inherent to the implementation of a stimulus package – the passage of laws, printing and mailing of checks, etc. Far more critical, by avoiding such a lengthy process, the government is able to appreciate the full weight and urgency of the financial crisis. For if in the process, giving away another round of “stimulus package” would come weeks later than implementing the collection of lower taxes, it is only then proper for the government to opt for the more time-efficient lowering of taxes than the time-consuming process of giving stimulus packages.The third reason meanwhile rests on the assumption that the government can afford to absorb the significant – but tolerable nevertheless – loss it would suffer from lowering taxes. All things considered, the government needs to lower taxes precisely because it can do so.

This is evidenced by the fact that, despite the massiveness of this current economic crisis, there is no indication whatsoever that Federal and/or State funds have been compromised in effect. Be that as it may, this is further evidenced by the fact that the government, still despite of the massiveness of this current economic crisis, was still able to come up with a whopping $700 billion bailout plan to rescue a good number of ailing financial institutions. By right of logic, one can correctly surmise: if the Federal authorities were able to raise such a sizable amount, then it is certainly possible that they can generate another type of trust fund to cushion the impact of the decision to lower the taxes imposed on the general public.Surely, any proposal that aims at lowering taxes levied on the people is not without identifiable risks. At the very least, it can compromise the implementation of the basic services – education, healthcare and social services, among others – rendered by the government to the people.

This is perhaps the most common – if not the most reasonable – argument propounded by those who dissent the idea of lowering taxes. But this argument can easily be countered; supported in part by the fact that the government generates revenues not solely from the imposition of taxes directly to the public, but also from various fronts that involve the operation of a “tax incidence” scheme. According to many economists, the government is able to accrue revenues by imposing the burden of taxation not only on “work effort”, but also on “savings, commodity prices, factor prices, resource allocations, and the compositions of

production and consumption” (Samuelson & Nordhaus 798). Put in other words, the government can accrue revenues from a myriad of ways – from people answering their phones or watching their televisions, to motorists filing up their tanks (Truek, et. al.

1; Chounard & Perloff 56); or from companies producing goods to consumers buying their products. The crux of the matter lies in arguing that government can still have other sources of income aside from direct taxation. Such minimal concern notwithstanding therefore, it has to be recognized that one does not risk bankrupting the government all together by merely acceding to the proposal to lower taxes.ConclusionBy way of conclusion, this paper ends with a thought which affirms the necessity of lowering taxes, as against maintaining a status quo relative to, or worse, increasing taxes thereof. In the discussions which were developed, three reasons were identified as legitimate bases that provide justification for such a proposal.

It was firstly argued that any move to lower taxes shall conversely give Americans more resources to spend for their needs. This in turn buoys up the economy in that it translates to higher incidences of public consumption. Second, it was likewise seen that lowering taxes, instead of having to dole out another helping of ‘stimulus package’, is a more efficient – and time-saving – way to address the financial crisis. Lastly, it was also argued that the proposal to lower taxes is a move that is certainly within the frame of competence of the government, notwithstanding the toll of the current financial crisis.