Question One
The statement is true, based on consumer theory under total utility and marginal utility whereby when an individual consumes more of a certain good, the total utility increases but the marginal utility decreases. As a result, as one’s income increases up to a certain level the marginal utility gets to zero and eventually negative.
In a study carried out by philosophers, they calculated the mean happiness rating for persons with different levels of income at a given time in a different country for a certain period. It was discovered in the United States that, there was a positive correlation between income of $ 20,000 and above and happiness, but beyond that mean higher incomes had a negligible effect if any on observed happiness.
In the 1950s, with an increase in average income for average individuals resulted in little or no change in happiness graph in the United States. Similar research was carried out in other developed countries (France, Japan, United Kingdom and Japan) they exhibited the same results. This result negates from the basic economic argument that people yield more utility from high-income levels and reasons for this behavior are; happiness or motivation is not based on absolute income rather from relative income and secondly, happiness and motivation adapt quickly to changes in levels of income. When individuals have a higher income they exhibit happiness but when the whole society becomes richer, nobody seems happy. This means that people are more concerned about their income with respect to the income of others rather than their absolute income. Happiness on high income earned can vanish when you discover that a colleague or a friend is earning the same amount as you.
Higher incomes make a person happy for a while but eventually, the person adjusts to those levels of incomes and reaches the level of comfortability. This was highly anchored on research done on happiness that concluded that after accruing enough to meet basic wants, there’s a paradigm shift on what is more important in an individual’s life and this includes family, friends, and community among others.
Question Two
The window tax which was imposed in 1696, was a tax levied on dwellings with the liability based on the number of windows in the building. There was concerted effort to reduce the tax liability by adopting various measures like joining windows and construction of houses that were windowless. Despite the rise of health conditions and rising protest against window tax, excessive tax avoidance, high levels of the tax burden to citizens, the tax remained for over one and a half-century but eventually repealed in 1851. This raises a quagmire of how the tax with all negative ramification was able to persist for that long even at some point there were increased changes on the tax rate.
Political and fiscal factors at the time necessitated the imposition of window tax and any other bad tax that could raise significant revenue for the country. The country was incurring huge military expenditures as a result of the war with France and the costs of re-coinage as the existing coins were in a terrible state. This resulted in intense fiscal pressure that needed to be addressed by the collection of revenue from the citizenry. The parliament and the monarch had to intervene and come up with strategies to address the fiscal pressure, and thus there was the introduction of an array of new takes like the tax on various commodities, the introduction of income tax and raising existing taxes like the window and land tax rates.
This tax was intended to send indications that England was able to pay its debt thus improving their credit rating index. The continued application of window tax was part of the response to addressing the fiscal and budgetary pressure witnessed in the country providing no room for reduction or abolition of any tax rate. This shows that when a nation needs raising significant revenue to address certain issues like development, fiscal and budgetary pressures, an evil tax can survive the times.