Term Paper: Unemployment and Tax Reform

Pages: 10 (3043 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Sociology  ·  Buy This Paper


[. . .] The basic reason for this disturbance in the equilibrium of social structure is the unequal distribution of wealth that has led various groups of the society to the path of poverty and destruction whereas other groups belonging to the social structure have been exercising complete control due to their financial and economic stability that has coupled them with power. These power imbalances have caused dissatisfaction that is increasing with time. (Social and psychological effects of unemployment)

Rising conflict at different levels of the social structure:

The financial and economic disparities among the various classes of the human society have led to a constant conflicting situation. There remains an increased tension among the different classes of our society causing disruptions in the functioning of the social structure resulting in negative social changes. This rising conflict at different levels of the social structure has given birth to a constant disharmony of ideas, difference of opinions and most of all the clash of interests between the various classes of the society. (Social and psychological effects of unemployment)

Increasing hopelessness among the younger lot of the society:

The rising conflict at the various levels of the social structure has further resulted in increased hopelessness among the younger lot of the society. The young and high spirited lot of our society sees either few or virtually no means of tapping their potential positively through the investment of their precious time and effort in constructive activities. (Social and psychological effects of unemployment)

Unfulfilled social wants:

The high rate of unemployment has also resulted in the unfulfilled social wants apart from the unfulfilled economic and financial desires. This is because; a stable job or a flourishing business venture equips an individual with unlimited wants with hope, pride and confidence in one's abilities. With financial success comes social acceptability that compels many to yearn for economic prosperity that the increasing unemployment rate forbids. (Social and psychological effects of unemployment)

Reason behind the increasing corruption:

All sociologists staunchly believe as a matter of fact that the worst social effect of the unemployment on the social structure is the rising rate of corruption. This is because; unemployment forces people to opt for the unfair and the unethical means of earning money. Being unable to earn what people are capable of through fair and just means due to the unavailability of opportunities, individuals belonging to this social structure are compelled to look for other alternatives thereby letting go off their moral and ethical values as well as social obligations. (Social and psychological effects of unemployment)

Decreasing self-confidence:

Millions of people world over have suffered and are still suffering the blow of unemployment. When the opportunities to earn decrease or become non-existent, people are forced to think low of them and thereby their level of confidence diminishes manifold. (Social and psychological effects of unemployment)

Hence from the above discussion, it is evident that the unemployment has resulted in a drastic negative change that has caused the equilibrium of the social structure to go all up side down. Below is a brief discussion on the effects that is the impact of unemployment on the federal level.

Effect of Unemployment at Federal Level

As Saunders in his research work suggests, effect of unemployment at federal level has had two highly important effects. Number one: "it has eroded the funding base. Moreover, it has increased the demands on welfare programs because of the consequences for poverty and inequality resulting from high unemployment" (Saunders). Both national as well as international evidence reveals that unemployment augments the "risk of poverty and contributes to inequality and that it also gives rise to a series of debilitating social effects on unemployed people themselves, their families and the communities in which they live" (Saunders). According to researchers, the debilitating social effects that disturb the equilibrium of social structures stemming out of unemployment include "adverse effect on community life" according to the researchers Bryson and Winter, adverse effect on health according to Taylor and Morrell, "on psychological well being" according to Headey and "on patterns of criminal activity" according to Weatherburn (Saunders). These deteriorating effects compel the authorities at the federal level to take charge of the situation by drafting policies and analyzing the current scenario in order to curb the problem and to solve the issue at hand thus involving the state governments and compelling them to contribute towards the betterment of the society and the stability of the social structure. This is because, "unemployment implies dependency, whether on a welfare system designed to spread the risk collectively, or whether that burden is privatized and shifted onto family and friends" (Saunders).

This shifts the focus of our research paper on tax reform and its effects on the social structure.

Effects of Tax Reform on Social Structure

Tax, "the principle source of revenue for our federal government" (Luthanen) is highly controversial and a source of tension among the tax payers and the officials responsible for chalking out tax details and tax application. This gives rise to the concept of tax reforms. This is also because, as Alan Keyes puts it, "the current tax code is analogous to slavery. We work and the government tells us how much of our money we get to keep. We have very little say in how much we pay under this system. Under a national sales tax, we would have absolute control over the amount of taxes we pay for the things we derive from society. If you are completely self-sufficient, you pay no taxes; however, once you decide that society has produced something you desire, you are required to pay the entire society something in return for the work from which you benefit. The national sales tax is a way for everyone to pay taxes that are equal and fair and a way for everyone to realize how much they benefit from the other people in their society, by drawing attention to all the products of society" (Luthanen). What makes tax reform and its effects so confusing, intricate and upsetting is because "the growth rate effects of tax reform are found to be on the order of one percentage point of growth per capita. This gain in growth is associated with replacing the existing income tax structure with a consumption tax. Replacing the tax on physical capital with higher taxes on labor is found to be mildly growth reducing" (p. 492- 501), as explained by the author Paul Pecorino of the magnum opus, The Growth Rate Effects of Tax Reform.

In order to well comprehend the effects of fundamental tax reform, "general-equilibrium and utility-based models of taxation are used" (The Economic Effects of Comprehensive Tax Reform). This is because, these models help the authorities, researchers, economists as well as the public to assess the economic efficiency in terms of the ratio between the number of winners as well as the number of losers (The Economic Effects of Comprehensive Tax Reform). The results derived from these models reveal that "with a switch from the current income tax system to a comprehensive consumption-based tax, younger generations stand a greater chance of being better off, although the other side of the coin is that older generations could be worse off. More specifically, society as a whole (accounting for effects on all generations) is likely to gain. However, it is unlikely to gain by very much, and under some reasonable assumptions it could even experience a loss" (The Economic Effects of Comprehensive Tax Reform). Hence, the effects of tax reform though remain intricate and hard-to-understand, are adverse to a greater extent. On the same account, as one of the experts in the related field suggests, "the present debate requires that we reexamine the values that caused us to choose an income tax in 1916 and continue to use it to the present. But for the debate to be fully engaged, it is equally necessary that the values underlying a tax on consumption only also be identified clearly so that the electorate can assess which set of values it subscribes to" (McDaniel).


In conclusion, the effects of unemployment are obviously debilitating considering its influence on the social structure. However, the effects of tax reforms though remain discouraging need more attention and thorough analysis.

Works Cited

Social Structure." Encyclopedia Britannica. 2003. Encyclopedia Britannica Premium Service. Retrieved 10 Jul, 2003 at http://www.britannica.com/eb/article?eu=117544.

Functionalism, Conflict Theory and Symbolic Interactionism. Retrieved 10 Jul, 2003 at http://www.*****/free_essays/4/sociology/functionalism-confict-theory-and-symbolic-interaction.shtml

Social and psychological effects of unemployment. Retrieved July 10, 2003 at http://www.e-resaneh.com/English/Social/Social%20and%20Psychological%20Effects%20of%20Unemployment.html

Saunders P. Direct and indirect effects of unemployment. Paper presented at the Australian National University in the F.H. Gruen Lecture Series on Welfare and the Labor Market: The New Frontier for Reform.

Luthanen R. COLUMN: Why Americans need a national sales tax in place., University Wire, 03-08-2002.

Pecorino P. The Growth Rate Effects of Tax Reform. Volume (Year): 46 (1994)

Issue (Month): 3 (July) Pages: 492-501.

The Economic Effects of Comprehensive… [END OF PREVIEW]

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