There are two things in life that are certain: death and taxes. In today's world, the majority of our government's income comes from taxation. A tax is not a voluntary payment or donation, but an enforced contribution imposed by government (Mikesell, 2011). Taxes are an amount of money collected from citizens, and they are used to provide public goods and services to benefit our communities. Taxes are amounts established in a political process of structured laws to determine how the collective cost of government services will be distributed among elements of the market economy. The two most important tax policies are the level of taxation, or how much taxes should be, and the structure of the system, or how revenue is to be raised (Mikesell, 2011). To better understand taxation and its purposes, this paper will discuss in detail the different tax structures- income taxes, sales taxes and property taxes and describe their advantages and disadvantages based on equity, economic effects, collectability, and transparency.
In the United States, taxes have been around even before the nation was founded. The criterion for taxes was proposed in a 1776 guide of taxation for a market-based economy by Adam Smith in the Wealth of Nations (Mikesell, 2011). During the Civil War, the government relied on excise taxes but they didn’t generate sufficient revenue, so the first income tax was enacted in 1861. By 1895, the tax was ruled unconstitutional by the Supreme Court, and in 1913 the 16th Amendment was passed which gave the United States the power to tax personal income and resolved the revenue problem (Mikesell, 2011). During the Great Depression in the 1930s, the government added unemployment compensation and social security progr...
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...l never be levied fairly because the world is turning into the “haves” and the “have-nots”.
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Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
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Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...
The government use of taxes plays a crucial role in today’s economy as well as personal finances, it has and will continue to leave its mark on the world we live in.
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