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The Optimal Taxation and the Current Tax System

Author

Listed:
  • Ioannis N. Kallianiotis

    (Economics/Finance Department, The Arthur J. Kania School of Management, University of Scranton, Scranton, PA 18510-4602)

Abstract

Purpose:The paper discusses the current U.S. tax system, which reduces the disposable income and makes savings negative (dissaving or borrowing). This has increased the debt of individuals and the low taxes on businesses have magnified the budget deficits and the national debt. Methodology:People are borrowing the present value of their uncertain future wealth and their high debt and low income raise the risk and this high risk premium heighten the interest rate on loans, especially on credit cards. Government has to increase corporate taxes and reduce the national debt by lowering government expenditures (military expenditures and national defense). Findings:The current tax system needs to be changed and become optimal, which is necessary to improve social welfare, fairness, and justice in our society. The middle class cannot work only to pay taxes and interest on its debt (redistribution of their wealth to government and banks), due to low disposable income. The disappearing of the middle class will affect negatively the entire socio-economic structure of the nation and after losing its power, it will start declining, as history has shown to us with so many empires that do not exist anymore.Recommendations:We hope the leaders to regain their lost power and lead the abandoned people to their ultimate objective, which is their perfection, and the nation to its highest point of prosperity.

Suggested Citation

  • Ioannis N. Kallianiotis, 2015. "The Optimal Taxation and the Current Tax System," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(3), pages 151-164, March.
    • Handle: RePEc:ijr:journl:v:3:y:2015:i:3:p:151-164
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Estimation; Consumption and Saving; Taxation; Government Expenditures;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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