Ann Rogers Economics SL Mr. Polis 14/10/2010 Taxation: High or Low?
Before any discussion about whether or not taxes should be high or low, one needs to define the term tax, and any subsets thereof. A tax is a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc. (Dictionary.com) There are two main types of taxes, direct and indirect. Direct taxes are taken directly from the income of the person paying taxes. These taxes are usually things like income tax, property tax and any other tax the government decrees should come straight from the income. An indirect tax is a tax that is placed on consumables and every consumer pays it if they buy a product that is taxed. Indirect taxes are called such because instead of being taken directly out of the income, they pass through the hands of producers before reaching the government. An example of this type of tax would be the Value
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The definition of taxes are - required payments of money from individuals, firms and households to government that are used to provide public goods and services for the benefit of the community as a whole. Taxes are the main income for the government.
Reasons for taxes: Taxes are the main income for the government. Taxes covers government expenditure (We know that government provide country's wealth with many social benefits like child care support, pensions, free medical help for children and many others. Government also pays for road infrastructure, lighting on the streets and so on. So we can see where the majority of taxes goes) To correct market failure (Governments can intervene in individual markets by changing taxes and this changing demand. Government might add VAT-value added taxes for some products, so then taxation becomes a way of increasing economic efficiency) To regulate imports a
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Martin Saarinen Economics International School of Latvia Grade. 12 Mr. Polis 14.10.10
Blog - Income Distribution/Taxation
Income distribution and taxation are closely linked. An unequal distribution of income is something that governments do not want, because this means that the society is getting more and more divided into the rich and the poor. As logic and market forces dictate the number of rich people would be smaller than the number of poor people, and as social structure or conduct dictates the rich would be in control over the majority of domestic matters, leaving the poor often without a say. This is something that the government does not want. It is also false to say that income inequality is a bad thing. This is because it needs to be established that an economy needs those with low income jobs and those with high income jobs, the economy needs winners and losers. That is the very basis of a capitalistic economy. Workers such as fac
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The definition for income distribution is "The distribution of wages earned across a company, industry, or country. Income distribution reveals what percentage of individuals are at various wage levels, information that can reveal more about overall wage patterns than average income can." This means that if a economy has large amount of people with a extremely low income and only a few with a extremely high income the distribution of income is negative, because it is unequal to a high extreme. Although, it is said that every economy needs some income inequality because if there was none then everyone would be earning the same amount and no one would strive to earn more, there would be no goal for people to work harder. "The majority of social scientists believe that income inequality currently poses a problem for American society with Alan Greenspan stating it to be a "very disturbing trend." In the United States income inequality has risen since the 1970's.
Taxes are compulsory financial contributions imposed by a government to raise revenue. There are direct taxes and indirect taxes; direct taxes are levied directly on an individual or organization, such as income tax while indirect taxes are levied on goods or services such as value added tax or exercise duties. As the definition says taxes are mostly used to raise revenue of governments, but governments can have other reasons for taxation, too.
Market failure can be corrected with taxation and efficiency can be increased – governments can impose a tax on unhealthy products such as cigarettes to increase the health of their workers that then can work longer, pollution can be controlled by imposing a pollution tax and people might read more if the VAT is removed from books.
The economy as a whole can be influenced just as well. Inflation, unemployment and the balance of payments can be managed by governments by increasing or decreasing taxation. ... Read more »
According to Oxford dictionary taxation
is defined as: "a compulsory contribution to state
revenue, levied by the government on workers' income and business
profits, or added to the cost of some goods, services , and
transactions"
The reasons for taxation can be for a
number of reasons, however it usually is due to these four reason:
-
To pay for government expenditure. Governments need money to cover
their expenditure programs. They can borrow money but usually it
comes from taxation as this is more effective, doesn't result in the
country being in debt and it can decrease the inflation rate. - To
correct market failure such as externalities.
To correct market failure governments
can intervene by changing the tax of products and thus changing
demand. They could do this for many different pro
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Taxes are a compulsory transfer of money (or occasionally of goods and services from private individuals, institutions or groups to the government. It maybe levied upon wealth or income, or in the form of a surcharge on prices. Taxation is one of the principal means by which a government finances its expenditure.
Reasons for taxation • To pay for government expenditure. Governments need to raise finance for their expenditure programmes. If the governments want to avoid inflation, then they will have to increase taxes or they can borrow a limited amount of money. • To correct maker failure such as externalities. Governments can intervene in individual markets by changing taxes and this changing demand. Such as raising higher taxes in cigarettes in order to reduce the tobacco consumption, the VAT (value-added tax) could be increased. This way the taxation becomes a way of increasing economic
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