Capitalism vs Socialism and Income Distribution

In a certain year, the tax authority collected $11.716B from 3.716M of Individuals who had a taxable income. That means an average of $3,152 per Individual Taxpayer.

However, we know that it’s not so straightforward. Using a 80/20 principle, a society is made up of 20% Super-Income Earners and 80% High Income Earners & Average-Income Earners. The Super-Income Earners pays a maximum tax of 22% of their taxable income, while the High- Income Earners pay at a tax rate of between 15% to 18% of ther taxable income. The Average-Income Earners pay a tax rate below 15% of their taxable income.

If a mathematical simulation were to be done of which group of Citizens contributed more of the $11.716B, it may just find that the High-Income Earners & the Average-Income Earners contribute to more than 50% of this $11.716B. The results will be in the range of 55%. This $11.716B collected will be used to pay for our essential services such as healthcare, education & public transport. Therefore, it may well be that both these 2 groups are subsidising the group of Super-Income Earners in the use of such essential services.

Oh, but it’s ok because the Super-Income Earners will use less of public services and more of private healthcare hospitals, private schools or overseas education and they don’t the buses or MRT. So, the other 2 groups are really paying taxes for what they are using. Really? Not forgetting that our public transport and public healthcare costs are increasing, why?

What if the G were to increase the maximum tax rate of the Super-High Income Earners from the current 22% to 25% or even 30%? Wouldn’t the tax burden now be shifted more to those who can afford to contribute more to society rather than those who need more disposable income?

Wouldn’t it be great if every Citizen can access private healthcare paid for by the State? Would it be great if every Citizen can afford to go to Uni paid for by the State?

The State Tax Authority act as the great Income Equaliser & Distributor when the thinking is for the benefit of all its Citizens. This is the Socialist form of tax collection found in Nordic countries of Norway, Sweden, Denmark & Finland. They recognize that in a Capitalist Democratic society, Inequality will arise. That’s why they collect much higher taxes from those who can well afford to pay higher taxes to achieve Income Equality.

And these Super-High Income Earners are quite happy to pay higher taxes because they understand the meaning of being Socialist, everyone benefits.

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