Questions about taxation and investment policies frequently appear in IELTS Writing Task 2, particularly in recent years. Based on analysis of past exam papers, this topic has appeared approximately 15-20% of the time since 2019, making it crucial for test-takers to be well-prepared.
Analysis of Sample Question
Some people believe that governments should tax people’s investment earnings to support social welfare programs. Others argue that doing so discourages investment and economic growth. Discuss both views and give your opinion.
This question requires candidates to:
- Discuss arguments for and against investment taxation
- Present a balanced analysis of both perspectives
- Provide a clear personal stance
- Support arguments with relevant examples
Band 9 Sample Essay
High-income countries face an ongoing debate regarding the taxation of investment returns and its implications for both social welfare and economic development. While some advocate for higher taxes to fund social programs, others contend this approach may hamper economic growth. In my view, a balanced approach incorporating moderate investment taxation is most beneficial for society.
Proponents of investment taxation argue that it provides essential funding for crucial social services. For instance, countries like Norway and Denmark utilize capital gains taxes to support comprehensive healthcare and education systems, resulting in high standards of living and reduced inequality. Additionally, investment taxation helps ensure that wealthy individuals contribute their fair share to society, promoting social cohesion and economic justice.
However, critics raise valid concerns about the potential negative impact on investment behavior. When faced with high tax rates, investors may seek offshore alternatives or reduce their investment activities, potentially slowing economic growth and job creation. For example, several Asian economies have maintained low investment tax rates to attract foreign capital and stimulate domestic investment, leading to rapid economic development.
I believe the optimal solution lies in implementing moderate tax rates that balance social needs with economic incentives. Countries can adopt progressive tax systems that maintain reasonable rates for small investors while applying higher rates to substantial investment gains. This approach would generate necessary revenue for social programs while preserving incentives for economic growth and innovation.
Progressive tax system implementation and social welfare balance
Band 7 Sample Essay
The question of whether governments should tax investment earnings for social welfare is widely debated. Some people support this idea while others believe it could harm economic growth. This essay will examine both perspectives before presenting my own view.
Those who support investment taxation point to the need for social welfare funding. When governments collect taxes from investment earnings, they can use this money to help poor people and provide better public services. This helps create a fairer society where everyone has access to basic needs like healthcare and education.
On the other hand, opponents argue that taxing investments could slow down economic growth. If people have to pay high taxes on their investment returns, they might invest less money or move their investments to other countries. This could result in fewer jobs and less economic development, which would ultimately hurt everyone, including those who depend on social welfare.
In my opinion, governments should find a middle ground. They could implement reasonable tax rates that don’t discourage investment but still generate enough money for important social programs. This balanced approach would benefit both the economy and society.
Scoring Analysis
Band 9 Essay Features:
- Sophisticated vocabulary: “comprehensive”, “social cohesion”, “economic justice”
- Complex structures and clear organization
- Well-developed arguments with specific examples
- Cohesive devices used naturally
- Clear position with nuanced analysis
Band 7 Essay Features:
- Good vocabulary with some sophistication
- Clear structure but less complex
- Basic examples and support
- Some cohesive devices
- Clear but simpler arguments
Key Vocabulary
- Capital gains (n) /ˈkæpɪtl ɡeɪnz/ – Profit from investment sales
- Progressive taxation (n) /prəˈɡresɪv tækˈseɪʃən/ – Tax system where rates increase with income
- Social cohesion (n) /ˈsoʊʃəl koʊˈhiʒən/ – Unity between social groups
- Economic incentives (n) /ˌekəˈnɑːmɪk ɪnˈsentɪvz/ – Financial motivation for specific behavior
- Offshore investments (n) /ˌɔːfˈʃɔːr ɪnˈvestmənts/ – Investments in foreign countries
For practice, try writing your own essay about how investment taxes affect different social classes or discuss alternative ways to fund social welfare programs.
