p.p1 create a sustainable tax system that

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Political parties face an issue with appealing a successful tax system and spending that appeal’s to citizens.  A lot of the time when politicians don’t commit to the tax policy do not qualify for another term (Alt, Preston, & Sibieta, 2007). Personal taxes are one of the main topics during debates between political candidates across the world, like the United States presidential elections or even the United Kingdom’s prime minister elections. A successful tax system is where there is minimal tax avoidance exists and most taxpayers are willingly paying for taxes because they believe the government provides helpful resources and services in exchange and it will even create a stronger bond between government body and citizens, which eventually encourages innovation. There are issues concerning taxes like where the tax money goes, who receives it and what a citizen gets in return for paying their tax. According to Goldberg (2013), the taxpayer is unaware of what he is paying for when paying taxes, therefore they believe it is an unnecessary fee that would not benefit them. Such issues hinder a country’s development, but if the right tax system is set it will encourage a wide range of developments, including investment, work, and innovation. Issues relating to personal tax, tax on one’s income, has been present since the day it was first put into action, whether it was rebellion, resistance or avoidance there has always been a problem. There has always been an issue on how to create a sustainable tax system that people are willing to pay for. The main thing that influences people’s perspective on a tax is what they get back for how much they pay in tax, if people feel like they’re not getting their money’s worth then they will try to evade it or just reject it.  Interestingly the different tax systems like regressive, flat rate and a progressive tax rate are looked at throughout the paper.The focus of the paper will be more on the progressive tax rate, labeled as the fairest tax rate that divides income across a country, is a tax system where tax rate inclines as income increases (Goldberg 2013).  It affects the country since without funds they cannot build and invest in infrastructure, investments or offer any real services that would change people’s minds on how much they’re benefiting from taxes. The debt to GDP, gross domestic product, ratio is one that analyzes debt in terms of how much a country is producing, it is an easy way of analyzing if a country is borrowing an extensive amount of money or not. An extensive amount of money is clarified within the paper numerically. Would a progressive tax system be beneficial for a country with a low debt to GDP ratio? Through research of papers, data, analyzing countries with effective tax systems, and a low debt to GDP ratio and monitoring how spendings are used will highlight the successful laws and actions people are willing to accept. The paper will review the benefits of a progressive tax and show how if optimized and used currently it can be beneficial for a country with a low debt to gross domestic product ratio. The paper will present examples of how countries use taxes to correctly develop their country and still keeping the citizens happy, by maintaining a tax system that benefits taxpayers. In conclusion, the paper will highlight the success of progressive tax systems in countries with low debt to GDP ratio through looking at the countries tax policy, a percentage of tax, what the taxes pay for and why people are happy to pay the tax. 
Theoretical Framework

A progressive tax on income is a tax system which decides how much a person should be taxed according to their personal income. While the low debt to GDP is the ratio between a country’s spending and their gross domestic product. It can be used to check a country’s spending compared to it’s production to see if the country is spending more on producing or consuming. There is also deficit rule which is referred to in GDP ratio, borrowing around 90% of the ratio, to make sure a country isn’t borrowing over their ratio (OECD, 2010). A country wants to avoid going into a debt that would hurt their growth because after borrowing over the defeat rule they will stop benefitting and growing and instead it will start to negatively impact their economy. Therefore a low debt to GDP ratio and a progressive tax system means that a country is efficiently producing without going into too much debt, which highlights a good and successful economy since its functioning effectively without hindering the country’s economy (Alesina & Passalacqua 2015). With such an economy money is managed considerably well, which has a positive result on the economy and the people inside the country. Hand in hand, low debt, and a progressive tax system would mean that taxpayers would benefit more from what they pay.

There is a complex relationship between tax and debts. There are many factors to where taxpayers’ money goes and what it contributes to. Tax money is contributed to an array of places that vary from education to debt. Tax money contributes to about 12 different sections Its ideal for taxpayers that the debt to GDP ratio stays low since whatever debt that is not paid back through GDP is paid by taxes. The relationship between debt and taxes can be analyzed through a direct relationship when debt increases so do tax rates, which in return means the country receives more money from taxpayers (Checherita-Westphal & Rother 2012). It is quite clear that that when debt is covered by taxes therefore when a country borrows over its limit and investing it in infrastructure or places that do not satisfy or significantly benefit taxpayers will cause a problem to taxpayers and encourage tax avoidance since their money is not being returned to them in a beneficial way, which will leave the country in debt and stall economic progress (Fouché 2008). Therefore it is important that a country does not borrow too much and invests in fields the taxpayers would be content with, otherwise more people would be discouraged from paying. The direct relationship between tax and debt is a complex one that should be concentrated on by a specialist to make sure that taxpayers would be willing to pay back the countries debt.

A country with a low debt to GDP ratio does not have to spend as much trying to reduce their debt. With a progressive tax system, the government taxes citizens according to their income, the larger the income the more a citizen would be taxed. According to McBride (2012) with a low debt to GDP ratio and a progressive tax then the government can effectively fund projects that the taxpayers would feel as the fee is justified for through economic growth.  Citizens in countries like Sweden are satisfied with paying around 60% of their income because in return they receive a great public education for their kids, health care and many other benefits (Fouché, 2008). Throughout the rest of the article it is mention that when taxpayers are willing to pay large percentage of their income to a government of countries with a low debt to GDP ratio they expect to get something in return for giving up a large portion of their income and most of the time anything else would disinterest citizens from paying taxes and even discourage them, since they are getting nothing in return.

Low debt to GDP ratio is an important model for a country to focus on in order to develop. With low debt, the country does not have to pay back a significant amount of money. Additionally, with a healthy and growing gross domestic product, it means that the country is manufacturing accordingly to usage and maintaining its growth. The treaty of Maastricht made it clear that any country involved wishing the European Union could have a certain debt to GDP ratio and if ever surpassed and if the debt is not diminished at a fast pace then the country will face consequences (Hasaj, 2012). With such emphasis on debt it is clear that it hinders a country’s growth, therefore minimizing a debt is essential for success. It is apparent that the Debt to GDP ratio is there to restrict the negative impact on a countries economic growth. According to Kitromilides(2011) a country’s economy starts contracting instead of expanding when their debt to GDP ratio is about 90% or more. After a certain point of borrowing money, it will put a country in too much debt that it will hinder a country’s development.

In addition, another phenomenon that can impact an economy by itself is the complexity of taxes. There are multiple ways taxes could affect an economy, for example , changing the tax rates, changing tax system, or even changing what is taxed. But the focus will be on how an economy is affected when a government wants to expand its GDP and economy through the manipulation and controlling tax rates. When a government wants to expand an economy but does not want to to go into a budget deficit it can use a fiscal policy, such as lowering tax rates. It seems peculiar that a government would decrease tax rate to boost an economy, but by lowering the tax rate it makes people perceive that they have more money which in turn encourages spending and consumption which would slowly improve GDP and boost the economy(Alesina, & Ardagna 2009). The research paper additionally mentions that interestingly enough, taxes could also be used to contract the economy, by increasing taxes you could slow down an economy and making people feel like there is less money in the system, which would deter spending and persuade people to save their money. In addition when taxes increase the government receives more money, but GDP still decreases since there is less spending.

To fully understand whether a progressive tax system would be successful in a country with a low debt to GDP ratio we need to see the advantages of a progressive tax system and why it would suit a country and help nourish its economy. There is an array of tax systems a country can choose from that are progressive tax system, regressive tax system, and a flat tax system. The progressive tax has already been mentioned and explained, it takes more money from the wealthier tax bracket and gives distributes it evenly, a big issue with it is that not everyone is treated equally, for example not everyone is taxed the same amount, but it protects the taxpayers when the economy isn’t doing too well, since it gets adjusted. The second tax system is the regressive tax system, which means that the tax rate increases as income decreases, therefore lower classes are taxed more than higher classes, like portrayed in China during 1995 the tax system hindered the living of the less fortunate and was linked with inequality (Cook, 2010). A big con with this system is that it takes more money from the people who need it more than others in the social hierarchy, which makes living costs as a less fortunate person harder, another issue is that it brings in less revenue than a progressive tax system. The final tax is system is the flat rate tax system, which can also be referred to as proportional tax system, since each taxpayer, no matter the income, pays the tax percentage on their income. An advantage of the proportional tax system is that is simple and easy to understand therefore minimizing chances of errors, but unfortunately the flat tax system takes equally from everyone which leaves the poorer classes in a worse position than they would be in an economy with a progressive tax system (Levinson, & Thomas, 1996).

A large issue that faces many countries is tax evasion and avoidance. There are many citizens that get away without paying taxes, which causes a real problem for governments. There are a couple of reasons why people decide to avoid taxes, many of them feel like they do not get what they deserve in return,in addition, they might believe that it is unfair and another reason is that they are uninformed about how much they’re supposed to pay and for what. A big issue is that people are unaware of how by paying taxes it affects how much they pay towards education, healthcare, and childcare, which makes them feel that paying taxes is useless, but if the government and media outlets explained where tax money is going to taxpayers would be willing to pay and appreciate what they get in return, which is a healthier decision ( Kornhauser, 2017). The awareness of where tax money is headed and how it positively contributes to taxpayer’s lives would encourage people to pay taxes. Without tax avoidance, governments would receive more money from taxpayers, which can be used to reinforce and benefit citizen’s benefits through paying more towards health care and education. 

Through the examination of the tax systems, the one most citizens would accept and would also be beneficial for the government would be a progressive tax system. The difference between a country with a low debt to GDP and a country with substantial debt would be that a country with low debt would develop faster, furthermore, it would not have to concentrate as much on how to solve and pay back the debt (McBride, 2012). Therefore a country that runs on a progressive tax system and has low debt to GDP ratio would take a larger percentage of money from the wealthier and distribute it in public goods that every taxpayer would find beneficial. The tax system has already been proven to be successful in countries with low debt to GDP ratios, Finland, Sweden and Norway, through its stability by closing the gap between societal classes redistributing money to suffice taxpayer’s needs, like public education, medical care, social security at an affordable price(Checherita-Westphal, & Rother, 2012). They have created a positive association for taxpayers between what they pay in taxes and what they get in return, they have provided health care, child care, education and many other benefits that make people profit from. By giving back to taxpayers the government gives an incentive for citizens to pay taxes and claim aid instead of avoiding taxes, which becomes beneficial for both parties (Fouché, 2008). By ensuring there is a system that incentivizes paying taxes and gives back to the taxpayers while maintaining political and social stability is important for any nation to develop. Therefore a progressive tax system in an economy that has a low debt to GDP ratio is figuratively the most successful since it divides the wealth on the taxpayers and leaves everyone content, which is ideal for a country to function and should be a goal countries should aspire to by balancing  how much is borrowed to create opportunities for jobs and infrastructure with manufacturing, consumption and net exports. 

The progressive tax most likely is efficient in countries with low debt to GDP ratios. Many European countries already use a progressive tax system for income, but not all countries with low debt to gross domestic product ratios have noticed how effective the tax system is. It is proven to be especially successful with countries with low debt to GDP ratios like Sweden, Norway, and Finland, and by taking their policies and incentives many countries can replicate their success.Realistically an income tax cannot solve all the issues concerning tax in a country it is only a small issue in the grand scheme. Yet, it is still important that a country gets the maximum of each tax. Furthermore, empirical data that would help analyze and prove the point that progressive tax system is beneficial against other systems would be tax money gained from each different tax system compared and analyzed. Additionally, data that would significantly improve the argument of low debt to GDP countries tax money is distributed on public and social services better than countries with significant debt would be records of tax money being distributed across services for both a country with a low ratio and a country that has a ration that is more than 90%.

The paper highlights the difference between tax systems and explains why the progressive tax system would be the most beneficial for both taxpayers and the government in an economy with low debt to GDP ratio. The progressive tax system is ideal for countries with a low ratio because it distributes wealth fairly across social classes and still rewards taxpayers by giving them access to services like social security, health insurance, and many other useful services. Therefore it is apparent how countries with progressive income taxes can distribute income with a low debt to GDP ratio and incentivize taxpayers by being transparent and showing the benefits of paying income taxes.


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