Essay Plans

What are the arguments for and against a rise in income tax?

SYNOPSIS:

POINTS:

Define income tax and explain how it is progressive - preferably with a diagram.
Explain poverty trap quoting current figures.
Rise in income tax may be a disincentive to work or if the worker has mortgage commitment, he/she may work harder still.
Introducer Laffer curve showing how a rise in income tax will lead to less revenue for the government.
Analyse the effect on the unemployed - less likely to join the workforce, minimum income necessary for them to join, rises.
Workers may look for non-taxable benefits at work eg. more leisure, social perks etc.
Will lead to increase in black economy - also increase in moonlighting.
Pay claims will rise.
Wider context : rise in income tax as a counter-inflationary policy (This is the main thrust of the essay).
- Assessment of fiscal policy as a means of demand management.
- Assessment of alternatives - (briefly) monetarism.
- Rise in direct could lead to a fall in indirect - gain for the poor.
Conclusion : it depends on the purpose (counter inflation) and/or on what the money is to be spent on (hospitals/defence).