Income Tax policy - Charle Lotfalla Income Tax Equity...

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Charle Lotfalla Income Tax: Equity brings Inequality By Charle Lotfalla
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Charle Lotfalla Nowadays, it makes more sense when everything we do favors efficiency more than equity among the people. Well, let us know the difference between efficiency and equity. Efficiency is concerned with the optimal production and allocation of resources. On the other hand, equity is concerned of how the resources are distributed among the people [ CITATION Tej10 \l 1033 ] . The debate is whether policymakers should prioritize equity over efficiency or the opposite. This is what is known as equity-efficiency trade off. Simply, what is in favor of efficiency might not be in favor of the equity and vice versa. This happens daily in our lives. For instance, when watching a football game, we usually see almost the same exact players in the field every game leaving the substitutes outside. This is a simple example of equity-efficiency trade off takes place. The coach of the team prefers the efficiency of the team over equity among all players. Today, I am going to write about the effect of this trade off in the income tax policy on equality and inequality in the society. In the beginning, let us know how income taxes are calculated. It is known that income taxes are calculated cumulatively. For example, here are 2014 income tax rates for US single citizens. [ CITATION Wil14 \l 1033 ] . This table seems superficially realistic and rational which is believed to favor both efficiency and equity indirectly. For more explanation, the direct proportionality between the salaries and the income tax rates allows the government to collect large money amounts
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