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The Importance Of Taxes To The Government And The Economy

taxes and the government and economy




CLARICE JOBETH R. KEE TAX2-D DECEMBER 13, 2013 THE IMPORTANCE OF TAXES TO THE GOVERNMENT AND THE ECONOMY “In this world nothing can be said to be certain, except death and taxes”. Everyone; from the  poorest to the richest people in every country, youngest to the oldest, regardless of gender and whatever strata one belongs, have experienced the burdens of taxation. From pay check to pay check; people tend to complain of how much little disposable income is left to them, after all the tax deductions. No taxpayer has ever enjoyed handing over their hard-earned hard-earned money to the government. A number of people has faked their tax returns, understating their income to expel substantial amount of burdens. Herman Wouk describe it as “the most imaginative fiction ever written” because of its lack of authenticity. If we hate it too much, can we just eradicate taxes? According to the Phew’s Tax Foundation Research  last April 2013, over 1.6 million U.S taxpayers cheat on their income tax returns. From this, the U.S treasury is losing an estimated amount of over $ 270 Billion annually. Basically, nobody seems to like paying taxes. In fact, Barry Goldwater pointed out that the taxes created more criminals (tax evaders) than any other single act of government. Will it be a good idea to join these digits? d igits? Taxation is the method or means by which the sovereign, through its law-making body, raises income to defray the necessary expenses of government. Expressed in another way, it is a method of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must, therefore, bear its burdens. Taxes are a compulsory financial contribution imposed by a government to raise revenue, levied on the income or property of  persons or organizations, on the production costs or sales prices of goods and services. Amidst all of the citizen’s resentment against taxes, and even at the time when Winston Churchill expressed his idea that “there is no such thing as a good tax”, and  when a crowd of  people supported him, taxes, can also be worth of its known advantages, that is when it is used in the rightful ways. The nation, its people, the government, the economy, and the world, benefit in taxes; one way or another. The Government and its Total Dependency Taxes are known to be the lifeblood of the government. Without it, the government is paralyzed, the government would be nothing but a rotten tomato; useless and put to waste. The government  bank on principally on money raised through taxes to produce revenue. Tax revenue is the money that our governments collect to provide services and to pay for public expenses. Therefore, the people of the sovereign state, is subsidized by the government through taxation. Ralph Waldo Emerson pointed out that “for every benefit you receive, a tax is levied. Hence, there is no such thing as a free lunch, the services provided by the administration, was only from the proceeds of taxes, paid by its populace. Taxes are also good –  they   they are the dues we pay to avail of the many significant benefits that the government provides for the society. During the reign of former President George W. Bush, hundreds of billions of dollars of tax cuts were enforced due to the American’s hatred of taxation. Most of the Americans are taxophobic and a number of anti- tax campaigns and rallies took place in the U.S. These people have not actually seen the reality of the goodness of taxation. The government programs (most of them) are working effectively to solve our social  problems, and  problems, and that the government is the only way to uphold significant values like economic security and justice –  then   then the money needed to sustenance these activities should be seen as a good. To put it another way, a mere individual can’t support the things that the government does  –  like caring for the our grandma’s and grandpa’s, creating justice, providing public education, fighting terrorism, and protecting the environment  –   and still maintain their argument that the taxes that support those things are bad. Taxes are the lifeblood of government and so if government is basically good, then so are taxes that fund it. The government can’t just print more money to support its expenditures, it would cause a rapid inflation on all commodities. What the government needs is the money from the people to its  people, an alliance that is not always seen because of major prejudices and hate of the people. So instead of seeing taxes as paralleled to being robbed by the government, the people should ought to think of these payments more like the tithing that many people do in their churches- we give it to the government for them to support us even further. If you hate taxes, then ask yourself, did you benefit from roads, policemen, firemen, traffic lights, national parks, coast guards, weather stations, public schools, hospitals, libraries, government agencies supporting children, old  people, out of school youth, abused women, etc.? If you still say no, think again. A nation would  be in chaos without an authority. Taxes and the Economy The financial operations of the state are impossible without taxation. Apart from this, taxation can be an overriding means in order to achieve the goals of progress and the objectives of economic development. It plays a key role in promoting economic growth: it spawns the revenue needed to fund governments’ economic growth policies and creates a framework for expansion of private sector activities. One way for governments to help grow their sluggish economies is by improving their tax systems, according to the IMF and other international organizations gathered in Brasilia to discuss the role taxation plays in promoting economic growth. A strong revenue base system is needed by the government to improve their balance sheets, lower external debt, and higher international reserves. Taxation has helped Latin American economies remain resilient in the face of a global economic slowdown. Yet with global risks and ambiguity continuing into the future, strengthening taxation frameworks could offer an opportunity for emerging market economies ( like the Philippines ) across the region to secure government revenues while at the same time boosting economic growth. Focusing on the structure of the tax system, Gilbert Terrier, deputy head of the IMF’s Fiscal Affairs Department, emphasized that “a key challenge in the region will be to increase the revenue productivity and structure of the personal income tax so that it can contribute to growth-enhancing public expenditure while helping attain distributional goals”. An optimum allocation of available resources are needed across inter country regions. The imposition of tax leads to diversion of resources from the taxed to the non-taxed sector. Tax revenues may be used to encourage development activities in the less developments areas of the country where normal investors are not willing to invest. Furthermore, tax policies can also encourage savings and investment when there is a contractionary monetary policy (it is used when needed) since developing countries has mixed economy, care has also to be taken to  promote capital formation and investment both in the private and public sectors. Taxation policy is to be directed to raising the ratio of savings to national income. Tax policies can also be used as hedged for critical economic situation like depression and inflation. In depression, tax is set to increase the consumption and reduce the savings to increase the aggregate demand and vice versa. Hence, it can also be used to accelerate growth within a country. Those who shaped the state and local fiscal policy had a sustained interest in the role of that taxation pays in the economic development regions, states, cities, and countries. At least 75 studies of employment growth, investment growth, or firm location includes an analysis of taxes. Tax policy is also used as a control mechanism to check inflation, consumption of liquor and luxury goods and to protect the local poor industries from the uneven competition. Taxation is the only effective weapon by which private consumption can be curbed and thus resources transferred to the state. Thus the economy can ensure sustainable development. A large deviation from the average tax level, multiplied by the tax elasticity, will yield a large location, employment, or investment effect. Wrapping Up Taxes-even how bad people cursed it, can also be beneficial. Taxes,in summary, can help promote peace and stability of a country- through the government. Imagine this line from Lewis Black: “They're so broke that they've actually cut essential services. In many places, they've cut policemen,  because, who the fuck needs them? Or firemen, son of a bitch, it's much more fun watching something burndown.”  Could you imagine a world without government intervention? Even if you escape the obligation of paying taxes, your actions will reflect its consequence back to you; you will face serious legal actions, and you are helping the detriment of the very government that is helping  you. Avoiding taxes is like destroying humanity.