GOVERNMENT TAXATION AND EXPENDITURE 1
GovernmentTaxation and Expenditure
GovernmentTaxation and Expenditure
All through history, allstructured societies have had some form of government. In mostsocieties, the main purpose and objectives of government have been tosafeguard the citizens’ freedoms and to uphold the interests of thesociety as a whole. A government requires income, which is known as"revenue" to meet most of its expenses. Most of theserevenues are raised through taxes. For example, in most countries,the government levies different taxes on individuals and businessesto implement programs. It is important to keep in mind that theFederal Governments largely depend on income taxes as its source ofrevenue while the State governments rely on both sales and incometaxes (Mirrlees, 2006). On the other hand, most city and countygovernments depend on property taxes as their main source of revenue.
The argument regarding taxesis simple. When the government is stable and can take care of itscitizens, then it has a positive impact on the society. This meansthat the tax paid is effectively being used thus, taxes can be saidto be good. Many researchers have outlined how some governmentprograms and activities help the people all in numerous ways. It isevident in many countries that most government activities orprograms are working efficiently to resolve some social harms, andthat the government offers a credible way of upholding essentialethical values and principles like justice, economic growth andeconomic security (Mirrlees, 2006). Therefore, it should be seen thatthe taxes needed by the government to support these activities areused in a good way. In other words, the society itself cannot sustainthe things that the government accomplishes such as the provision ofpublic education, taking care of the elderly, fighting terrorism,establishing justice and caring for the environment. In fact, it isastounding why people still advocate that the taxes paid to financethese issues are bad. People with such thoughts and beliefs mustunderstand that taxes are the means of support of the government thusif the government is fundamentally good, so are taxes.
However, the means of taxationor the category used by the government to collect taxes might be themain concern. It is important for the government to allow the peopleto save from their income. Therefore, it is only fair that the rateof tax being paid should be reasonable burdening people. Forinstance, the neoclassical approach recommends the use of flat taxeson all incomes (Mirrlees, 2006). This approach has been criticized bymany economists arguing that this form of taxation will affect thepoor and the middle-class people negatively but affect the richpositively by making them richer. In other words, demanding the sametax level for all incomes means that the poor and the rich will paythe same amount of tax. This means that after taxation, the rich willremain with much more disposable income than the poor will. Accordingto the mixed approach, the government is perceived to be an activemember to promote economic growth. This allows both the governmentand the citizens to save. The mixed approach encourages progressivetaxation rates, meaning that the rich will pay more taxes dependingon their income level. On the other hand, the radical approachdifferentiates the people who earn income from capital such as rents,profits, dividends, and interests, from those who earn throughphysical work like labor (Mirrlees, 2006). Therefore, different taxrates exist for either of them though it has been seen thatcapitalists gain more from government expenditure than laborers.
Conclusively, it is importantfor all to understand the importance of paying taxes. Taxes shouldnot be seen as a negative aspect or characteristic of the government,but rather should be seen as a way of financing public utilities andamenities. In any case, the main point is that giving donationstowards an organization (government) that is upholding the standardsof the public should not be regarded as a negative thing.
Mirrlees, J. (2006). OptimalTaxation and Government Finance. Welfare,Incentives, and Taxation,366-384.