Benjamin Franklin (1789) once said that there are only two certainties in the world: death and taxes. Tax policies are critical to all countries, whether they be developed or developing countries. A tax policy can boost economic development and reflect the views of citizens. In Canada, personal income tax (PIT) is the largest source of revenue for the Canadian government and accounts for almost half of federal government revenue (Statistics Canada, 2010). Figure 1 shows different types of tax revenue as a percentage of GDP in Canada. It shows that a significant proportion of Canadian GDP is composed of PIT. Tax has become a large portion of Canadian family’s expense, which has become a burden to some families. In fact, Lammam (2016) notes that taxes account for 42.4% of an average Canadian family’s income, more than the 37.6% spend on food, clothing, and housing combined.
In 2016, the Canadian federal government introduced a new income-tax bracket that reduced middle-class income tax. Consequently, those making between $44,701 and $89,401 and were paying 22% are now only paying 20.5%. However,
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One of the reasons is that understanding the relationship between labor supply and personal income tax is an effective way to evaluate the efficiency of government tax system and deadweight loss of taxation. Mirrlees (1971) addresses optimal taxation, noting that there are advantages and disadvantages to income tax. While governments need tax as revenue to support disadvantaged groups and social services, income tax also causes a decline in aggregate output as it decreases people’s work hours. To minimize the welfare loss, he developed a model for finding the optimum level of taxation and government expenditure. Subsequently, research on individuals’ decision on hours of work based on the government tax system has become one of the focuses of economists who want to study labor
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...
lose the job and have to live on. They can get the pay-cheque from government
Canadian Centre for Policy Alternatives, Alternative Federal Budget 2011, Report: Rethink, Rebuild, Renew (pg. 69, 70, 72, 75) Retrieved from: http://www.policyalternatives.ca/AFB2011
Canada is well-known for its diverse and complex cultural mix of people. Because there is such a broad variety of people living in Canada, there is bound to be some disconnect when it comes to the idea of true equality. “An absolute definition of poverty focuses on essentials, suggesting that poor families have inadequate resources to acquire the necessities of life (food, clothing, and shelter)” (Brym, Lie, 2012). When a person is deprived of their necessities of life, it is considered to be an obstruction upon their rights and freedoms as a Canadian citizen. “Currently, 14% of Canadians are living in poverty, with much higher rates for single-parent mother families, unattached female seniors, urban Aboriginals, and recent immigrants” (Reutter,
Introduction Taxes; who benefits and who gets ripped off focuses mostly on Federal and county taxes and not on state taxes. This report aims to give the reader some insight on taxes: Why we have them, what types of benefits they supply, who benefits from them, and who gets screwed by them. It informs the reader of the different types of taxation, where the money comes from and where it goes. How can people avoid some tax increases? But most of all, this report informs the reader that there is an incredible amount of money being wasted by the federal government through overspending and irresponsible behavior of government departments. This overspending has created a deficit that has caused billions of dollars in damage to the credit of the country. As a result of these excess taxes, the American taxpayer is getting ripped off by paying for waste in government. Most people in this country are being ripped off in the amount of taxes they pay due to corruption gover...
The United States tax system is in complete disarray. Republicans and Democrats agree that the current tax code is complex, unfair, and costly. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms (Armey 1). The main reason the tax system is so complex is because of the special preferences such as deductions and tax credits. Complexity in the current tax system forces Americans to spend 5.4 billion hours complying with the tax code, which is more time than it takes to manufacture every car, truck and van produced in the United States (Armey 1). Time is not the only thing that is lost with the current tax system; Americans also lose great deal of money complying with the tax code. Resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, and tax avoidance. The cost of complying with the current tax code totals about $200 billion annually, or $700 for every man, woman, and child in America (Armey 1). The overwhelming consensus that the current tax system is inadequate has ignited the search for tax reform. There are numerous proposals for tax reform; one particular proposal brought forth by various conservatives is the idea of national flat rate income tax. The idea is to replace the current income tax with a single rate that everyone pays.
In general, it can be said that the tax system in the United Kingdom attempts to reduce inequality and poverty, although it is seen by many as an unclear and unfair system. Tax scams and other avoidance measures are symptoms of a wider malaise in a regime that need to be more transparent and fairer (Telegraph View, 2014). However, for those in lower pay employment, its effectiveness can be seen through the income tax, which will deduce between 10% and 20% of their final income, compared to 40% to 50% of those in higher pay. In addition, measures such the national minimum wage and benefits in-kind guarantee that individuals in lower pay are provided with a minimum standard of payment as well as services that might not be easily accessible for them as much as there are accessible for wealthy people.
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.
High Tax Rates, one of the main criticisms of Canadian taxes is the high tax rates, especially for higher-income individuals. The progressive tax system means that as your income increases, so does the percentage of tax you pay. Some argue that this can feel like a big problem, as a massive portion of their earnings goes towards taxes. The Canadian tax system is known for its complexity. Filing taxes can be a long and time-consuming process, especially for people who haven’t learned about taxes and tax laws and regulations.
The four types of taxes this paper will discuss are income tax, sales tax, property tax, and user fees. Income tax was not permanently established until the 16th Amendment was passed in 1913. Most federal taxes had been previously derived from excise taxes on tobacco and alcohol and other consumer goods. The US Constitution, when written and still continues to, legitimize taxation in the United States through Article I, Section 8, that Congress has the power to lay and collect taxes, duties et al, pay the debts or provide for the common defense and general welfare of the United States (Cornell Law LII). Investopedia defines income tax as ‘a tax government(s) impose on financial income generated by all entities within their jurisdictions (Investopedia, 2014). Businesses and individuals are required to file an income tax return every year to determine if they owe taxes or qualify for a refund. That is determined by measuring the total income one earns to a designated tax rate, calculating one’s taxable income, which are some or all items of income reduced by other adjustments or expenses in that tax year. There are different subcategories of income tax; there is a federal income tax that is set by the federal government, apart from a few states, there is a state income tax that is imposed on their respective residents, as well as the possibility of there being local income tax ...
Myrsky, M. (2003). What does a Good Tax System Require. Finland: Eastern University of Finland.