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Importance of taxation
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1. Negatives of the proposed tax system
The income tax system ensures a stable source of income for the government. Even at 10% unemployment rate, the government will still make money out of the remaining 90% of the workforce. So long as the workers make money, so does the government. Therefore, the government does not have to worry about where to get money even in an economic depression. However, this is a luxury that the government will not enjoy with a single federal taxation system. Gasoline prices and usage is affected by market trends and economic performance. At one give time, consumption will be low and its fluctuating price will keep affecting how much the government makes from a single gallon. Therefore, unlike the case with income tax, the government will not have a steady source of income. This will affect the economy and the wellbeing of the society (Nishiyama & Smetters, 2005).
The proposed taxation technique is also uncertain. With income tax, the government is able to calculate the amount of money it expects because it has employment records and all employees are registered with the revenue service. However, with gasoline, forecasting consumption is difficult because you do not know when the price will change, when the consumers will resort to use a substitute product or when the supply will go down. This presents the government with financial planning challenges which can be easily eradicated with a more certain taxation system such as the income tax. Government planning is very crucial when it comes to economic and social development. Inadequate planning can have serious economic effects on the society. Therefore, with the new system in place we not only face a taxation challenge but also an uncertain economic ...
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... of wealth, the current tax system is fair. O the other hand, most populations use and favor the income tax system since it does not dig deep into one person’s pocket and leave others out. Everyone gets to do his part (Conesa & Krueger, 2009).
References
Avi-Yonah, R. & Slemrod, J. (2002). "Why Tax the Rich? Efficiency, Equity, and Progressive Taxation". The Yale Law Journal 111 (6): 1391–1416
Conesa, J. & Krueger, D. (2009) Taxing Capital? Not a Bad Idea after All. American Economic Review, 99(1): 25.48.
Correia, I. (2010).Consumption Taxes and Redistribution. American Economic Review, 100: 1673.1694.
Jehle, G. & Reny, P. (2000). Advanced Microeconomic Theory. Addison Wesley Paperback, 2nd Edition:
Nishiyama, S. & Smetters, K. (2005).Consumption Taxes and Economic Efficiency with Idiosyncratic Wage Shocks. Journal of Political Economy, 113(5): 1088.1115.
Sklar, Holly. “The Growing Gulf Between the Rich and the Rest of Us”. They Say I Say. Gerald Graff, Cathy Birkenstein, Russel Durst. New York: W. W. Norton & Company, 2009. Print.
Sixteenth Amendment- Authorization of an Income Tax – Progressives thought this would slow down the rising wealth of the richest Americans by using a sliding or progressive scale where the wealthier would pay more into the system. In 1907, Roosevelt supported the tax but it took two years until his Successor, Taft endorsed the constitutional amendment for the tax. The Sixteenth Amendment was finally ratified by the states in 1913. The origin of the income tax came William J Bryan in 1894 to help redistribute wealth and then from Roosevelt and his dedication to reform of corporations. I agree with an income tax to pay for all of our government systems and departments, but I believe there was a misfire with “redistributing wealth.” The redistribution is seen in welfare systems whereby individuals receive money to live. This is meant to be a temporary assistance, but sadly, most that are in the system are stuck due to lack of assistance in learning how to escape poverty. There are a lot of government funded programs, but there is no general help system to help lift people up and stay up, so there continues a cycle of
The “Fairness of Taxation or Wealth Tax” is where taxes are calculated by the net worth of the person or the couple (household). This would be hard for tax collectors to determine each and every component of net worth of a person.
Hall, A. (2001, August). The Flat Income Tax and the Fair Tax Consumption Tax: A
...e, Maxime, and Giuseppe C. Ruggeri. "Flat Taxes And Distributional Justice." Review Of Social Economy 56.3 (1998): 277-294. Business Source Premier. Web. 19 Jan. 2014.
I. You might have heard politicians in the news, talk about overhauling our tax system with a new fix-all idea, the flat-tax. This would simplify our overly complicated tax system and might seem appealing at first glance, however there are serious problems with it.
One person may see that the increase taxation on the poor and the decrease taxes on the wealthy is not an issue because the wealthy pay a lot of taxes already. However, many people don’t realize the fact that, yes, the wealthy are paying a lot of taxes because they make more money, but they can afford to pay more. Recently, in a CNN article, more than forty millionaires want their taxes to increase, which proves the fact that the wealthy have plenty of money to give back to the community. In addition, their just going to keep getting wealthier and wealthier by the
The progressive system of taxation takes more when people make more so that the entire nation benefits instead of just a select few.
Reich, Robert. "Why the Rich Are Getting Richer and the Poor Poorer." Mountain View College Reader. Neuleib, Janice. Cain S., Kathleen. Ruffus, Stephen. Boston: 501 Boylston Street, Suite 900. 2013 Print.
Reich, Robert B. “Why the Rich Are Getting Richer and the Poor, Poorer.” A World of Ideas:
Inequality exist and is high in America because the amount of income and wealth that is distributed through power. In America the income distribution is very inequality and the value of a person wealth is based on their income with their debts subtracted. “As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)” (Domhoff, 2011). In contrary the poor do not get ahead and the rich get more. Americans are judged and placed in class categories through their home ownership which translates to wealth. Americans social class is often associated with their assets and wealth. “People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives” (Domhoff, 2011). Power indicates how these “values” are not distributed equally in American society. Huge gains for the rich include cuts in capital gains and dividends and when tax rates decrease for the tiny percent of Americans income is redistributed. Taxes directly affect the wealth and income of Americans every year.
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...
...ruggle or in some cases continue to struggle if this tax was a continuous one. This tax is aimed at helping the disadvantaged and creating equality within our country and with the help from this tax our country would be on its way to moving forward to that step. The Khulumani Support Group welcomed this “wealth tax” in a statement that set out fair steps that should be taken by government officials to put this wealth tax in place. Their steps are not only fair but are also logical, wanting at least R2 billion for 5 years thus when divided up providing R2000 per month to the amount of victims that are estimated at around 120, 000.