Introduction
Tax is said to be the lifeblood of the state, necessary to continue its existence. Since ancient times, paying taxes has been a staple of civilization as it serves as a long-term source of funding for social programs and public investments in order to promote economic growth and development. Health, education, infrastructure, and other services programs are essential to achieve the common aim of a successful, functional, and harmonious community. Hence, taxation is a highly debated topic so let’s talk about it.
The Ethics Of Taxation Feb 14
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Taxation is a term for when a taxing body, typically a government, imposes a financial obligation called ‘tax’ on its citizens and corporations. In almost every country on the planet, taxes are imposed largely to raise income for government spending, but they also serve other functions. There are taxes on what you earn, what you buy, and what you own.
It started about 5,000 years ago in ancient Egypt. Instead of money, grain served as a tangible store of value that could be easily collected, exchanged, and redistributed across society so Pharaohs would appoint commissioners to collect 20% of all grain harvests as a tax. Civilizations as well as the idea of taxation evolved and spread throughout the world.
Income tax is a common one, charged on a person’s generated income that could come from a variety of sources, including wages, capital gains through investment appreciation, dividends or interest received as supplemental income, and payments from products and services, etc.
Payroll tax is another one. An employer omits a percentage of an employee's wages and pays it to the government on the employee's behalf to fund Medicare and Social Security. These are important insurance programs for securing our retirement and protecting our health.
A transparent, fair, and growth-friendly way of raising the revenue needed to provide fundamental government services like education, health care, and infrastructure is the foundation of a good tax system. But this is a struggle in many developing countries. Issues that they face are extensive corruption, tax evasion, tax avoidance, and weak political systems.
Moreover, taxes are important for businesses as it is used to build infrastructure, such as roads, telephones, and power, which is required for the country to thrive, which in turn stimulates economic activity throughout the country. The consumption level gets higher, thus, raising a country’s standard of living.