Taxation Essay

995 words - 4 pages

Taxation systems are usually modeled in such a way that they take into consideration the social welfare of the citizens. The government and other policy makers have the responsibility of ensuring that the system takes into account the needs of the citizens. The bottom line is that taxation should foster equal distribution of resources. The rate of taxation is usually arrived at after several considerations have been made. The rates are not fixed as they depend on the various economic changes. The issue of how taxation should be distributed among the different economic classes is yet to be addressed.
Whenever economic turbulence increases, the policy makers adjust the taxation rates in an effort to stabilize it. When it comes to income tax rates, the policy makers assume that all citizens have equal preferences on leisure and consumption. Apart from adopting a taxation system that is welfare considerate, it is also the policy makers’ prerogative to offer incentives to the tax payers. In trying to achieve this balance, the government stands to face opposition from certain quarters of the population. This is because for the system to be stabilized, the government has to streamline tax rates with its own incomes and that of its citizens. This means that consumers of a certain product or people of a certain economic class can be taxed differently. This is the reason why taxation is a subject of such passionate debate as far as a country’s economy is concerned.
Taxation is directly connected to economic growth. However, this does not point to definite patterns. For example, higher taxes do not necessarily mean stunted economic growth and vice versa. Tax adjustment usually serves to shift spending towards areas that stimulate economic growth. This then negates the possibility of an individual or organization controlling a particular economic resource. The reason for tax rates is not always directly related to economic growth. For example, a higher tax on alcohol and cigarettes may serve to reduce their consumption habits.
When it comes to income taxes, the focus is usually on jobs, personal investments, and savings. The debate on who should bear the greater burden when it comes to income taxes is timeless. If all types of tax are aimed at developing the economy, it should be everyone’s equal responsibility to engage in taxation regardless of one’s economic class. Both parties involved proclaim the legitimacy of their arguments. The articles under discussion are representative of this debate. On one side of the debate, there are those who feel that the rich should pay more taxes. Then there are those who feel that the rich should not be punished by shouldering the burden of taxation (Benson and White 1). From an economic theorist’s point of view, both articles articulate valid arguments. However, this does not nullify the significance of the prevailing economic situation. The above debate can be based on various economic contexts.
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