Cuison, John Carlo F.

11239735

SPECTO1
Rendition

Chapter 14: Rethinking the Progressive Income Tax

Before, I really think that the income tax in the Philippines is very high. This
is with the disappointment that government is not meeting the expectations of its
citizens along the notion that our government composes of many corrupt officials.
When I read Piketty, he showed me that developed countries have a top marginal
tax rate of 50-70% (compare to our 32%). Having these low income tax rates will
have a detrimental effect if partnered with citizens expectations. People are
expecting so much when it comes to their welfare but our government cannot
deliver since it lacks budget. When their expectations are not met, they will feel
that their contributions to the government, through taxes, are not used properly.
This will lead to tax evasions of the unsatisfied citizens. Furthermore, if the
majority of the population felt that the top 1% is exempted from some taxes or not
tax properly then it will lead for them not paying as well. If the well off is not
paying, bottom 50% of the population would then to not pay as well.
There is also a notion that white-collar workers might leave the country when
we increase the income tax rates but based on historical data, it is not the case. To
add, a worker would also have many factors to consider than the income tax rate
of a country. He may consider the place where his family lives, the prices of
commodities etc.
At first, I do not like the idea of estate tax. It is like we are taxing an
individual because he wanted to give his descendants or heirs a better life. My
father started almost from the scratch and I can say that my grandparents belong
to the bottom 50 percent. I always see that it is my fathers hard work that brought
us where we are now. This is the reason why I do not like the estate tax since my
father went to many troubles for us. After reading Piketty, I understood the
progressivity of estate tax and even criticize the low estate tax. We should not
forget the progressivity of the estate tax and remember that it gives consideration
to individuals that have little. I also thought of the application of this in general
rather only in my case. Knowing that capital can produce money that will also
create money made worthiness of the people that have wealth and the same time,
the people who will inherit it.

I always thought that economists are immune to political biases especially

the ones that produce research papers that are based on actual data. Piketty
showed us the importance of knowing the political background of economists. We
should also take into account their social status in which they belong. Overall, we
should know the background of the economists so we can decode whether the
claim they are making might contain biases.