Wise Bread Picks
With Congress taking their time with the discussion of extending the Bush tax cuts, everyone seems to have stated their opinion on whether high income earners should have their taxes raised. Naturally, as only 3% of all taxpayers qualify for the highest tax bracket, most middle class people are in favor of letting the tax cuts expire only for the highest earners.
On the surface, it doesn't concern them, so everything is A-OK. But does high taxes for high income earners really not matter to the middle class? Here are a few possible ways higher taxes could affect anyone.
High taxes could affect your boss' salary, and how do you think she feels about this? No matter how much anyone makes, higher taxes mean a reduced paycheck. Do you think she will be happier or less satisfied? If she is unhappy, do you think the work place will be a better environment?
Of course, not all bosses will ever let his/her emotions affect the work place, but you know these people are out there!
High taxes definitely affect business owners, and that could mean less perks for employees to offset that dreaded tax bill. For small business owners who make celebration plans like where to go for the Christmas party based on mood, employees are definitely taking a hit.
Don't care about perks? What about your salary? The decision of salary increases often come directly from the top. If business owners are feeling the pinch, she is naturally less likely to feel generous to everyone else. If she is unhappy, you might not get a raise no matter how many times you ask.
High taxes could affect essential services. Everyone's assumption that the rich can afford to pay higher taxes is absolutely right, but they can also afford to work much less than they do now. Go too far with tax rates, and the motivation to work longer hours fade. This potentially means fewer doctors performing surgery, and fewer entrepreneurs coming up with brilliant ideas that improve our way of life, which lead to lower quality of life for everyone.
The economy could suffer. Studies have shown that the top 3% of income earners make up 25% of discretionary spending. If they have less to spend, the United States economy, being a consumer economy, will suffer. Less demand for goods, less money for all businesses, and many more lost jobs.
High-tax states will suffer too. This might sound irrational (and it very well could be), but a few people I know are thinking about moving to another state with a lower tax rate. After all, addresses matter when it comes to our finances. They can afford to pay higher taxes, but because the subject is on the forefront of their minds, any solution to counteract the effects are on the table. And it doesn't stop at the state lines either. Some are even thinking of moving overseas to countries where tax rates are more generous.
Your children could ultimately suffer. As our government goes further into debt and needs more revenue to sustain its "lifestyle," the only way to get money is taking it from businesses and individuals through taxes.
Eventually, businesses and individuals alike will realize that it might be better to move abroad. On a small scale, this has already been happening in the past decade. If this becomes more of a widespread trend, then America could lose its competitiveness and everyone living in it will suffer.
