The Pros And Cons Of Taxation

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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.…show more content…
The reason behind it that every state has different income tax and TANF benefits. For instance, if a single parent with two children start earning at half of the Federal Poverty Level (FPL), this family will face negative effective marginal tax rate. These states include Alabama, Connecticut, Nevada, New Jersey, Texas, and Virginia. However, in other states and the District of Columbia this family will face positive marginal tax rate. For example, in Wisconsin, if a family starts earning at half of the FPL or $8,700, their food stamp benefits increase by $200, the EITC benefits increases by $3,500, other federal credits add $900 and state tax credit add $500. On the other hand, with their increase in income, their TANF benefits decrease by $7,500. Adding to that, the family pays $600 in employee share of payroll taxes. This results in a net income increase by only $5,500. “Their net income is thus 36.3 percent less than their change in earnings.” On the other hand, in New Jersey, this family would face -27.9 percent effective marginal tax rates, since TANF benefits remain unchanged compared that to Wisconsin

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