Taxation As Old As Civilization

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Taxation is as old as civilization itself. Kings and governments collected tribute from their peasants and citizens even before the invention of currency. Taxes in a form of cattle and labor were popular. However, in the modern era every industrial nation taxes their citizens though multiple ways. Federal income tax and sales tax are some examples of government taxation. Taxation is essential for any government, as it is their primary source of income. For instance, the Internal Revenue Service, a U.S. government agency responsible for tax collection, “receives over 140 million individual tax returns and collects over $950 billion in taxes” (Wood). Considering taxation is human made, it does have flaws that affect both the poor and the rich. The U.S. government had to tackle the problems poor people were facing. As a result, the government created the Earned Income Tax Credit (EITC) and Temporary Cash Assistance for Needy Families (TANF) to lessen the burden on the poor population. “The EITC is a federal tax credit for low- and moderate-income working people. It encourages and rewards work as well as offsets federal payroll and income taxes.” The way EITC encourages people to work is that the amount of support that a person gets “grows with each additional dollar of earnings until reaching the maximum value.” However, EITC benefits people with people with children the most. For instance, childless people get up to $503 of support from EITC, while those who have one child can get up to $3,324 of support (CBPP). “The TANF program is designed to help needy families achieve self-sufficiency.” TANF provides financial support and work opportunities to families so that eventually they will become independent (ACF). In New York City, t... ... middle of paper ... ... However, when the family moves to 150 percent of the poverty level, they effective marginal tax rate “range from 26.6 percent to over 100 percent” in Connecticut. In other words, this family will have “fewer resources at hand,” because of the increased taxes. Moving from 150 percent of the FPL to double of the FPL, their effective marginal tax rate will be between 41.5 percent and 57 percent. “With rates this high, individuals may question whether the additional work effort is worth it” (Elaine). Although the U.S. government made great progress towards lessening the burden on the poor population by creating EITC and TANF programs, the current taxation system, specifically in the low-income area, needs improvements. Due to the taxes, in some states the low-income population can struggle even when their wage increases, since there are fewer benefits available to them.

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