The topic of taxation is often a highly sensitive one and concerns a wide range of people from individuals to corporations as well as governments. Taxes are considered part of contributions that are paid in order to support public services and infrastructures thus debates over tax policy and its nature, equality and accountability arise.
One of the central questions in taxation is: What’s not fair about the use and collection of the citizen’s tax? But when one looks at it they might think that taxes are monies levied from one person or entity to another. This perception is however rather simplified.
One the one hand, consumers and business people receive a direct impact of taxes through income taxes, taxes on properties, sales taxes and other charges. The taxes cut on disposable income and profit and thereby act as a powerful force in determining spending as well as operations in businesses.
In turn, taxes can sometimes also be shifted or passed on to the third. For example, businesses may result in consumers paying higher prices of goods as a way of shifting the corporate tax burden to consumers. The same case can be seen in property taxes where the landlords may increase the rates of fees charged to the tenants due to the increased property taxes.
In addition, the incidence of taxes—the portion of taxes that is, who pays the economic burden of the taxes—can change based on particulars of the market, the price elasticity of demand, and the bargaining power of consumers. It is also possible that the burden of taxes can be directly placed on consumers, workers, shareholders, or even a combination of these four groups.
Tax policies are important methods for determining who will be responsible for tax burdens and how they affect the economy. Progressive tax systems that are based on tax brackets that make tax rates rise with higher income levels have as a goal the redistribution of wealth and elimination of income inequality. Limiting this with the help of pro-gressive taxation will reduce distribution inequality, while the opposite can happen as regressive taxation systems will increase force on lower income groups.
The question of whose tax it is clearly demonstrates the difficulties associated with the area involved and its paradoxes. The fundamental dilemma in allocating the costs of public goods and fostering economic growth and efficiency while maintaining fairness in the division of burden and rewards.
Taxation – as it has been shown in the foregoing – is a dynamic and multi-faceted cornerstone of the economic, social, and political spheres of any society. Indeed the individual and groups that bear the burden of the tax are not associated with the government rather than the taxpayers themselves and the wider society where production takes place. It is therefore important that tax policy borns from these complexities in strategy in order to address the interest of the whole society.