The Question Is, Should We Tax Or Not Tax?

 The Question Is, Should We Tax Or Not Tax?

It would have been unthinkable to pose the topic of whether or not to tax twenty years ago.
Income tax is a relatively new concept in economic history. Nonetheless, it gained such societal acceptance that no one dared to pose a meaningful challenge to it. Some people on the outskirts of society were so insane that they refused to pay taxes and ended up in prison. Some of them tragically failed in their attempts to build political parties and turn their platforms into actual power. However, I did understand a few things they said.

The original purpose of taxation was to fund governmental expenditures. However, they went through a cancerous metamorphosis. They started to be used as a way to show off one's social preferences. Urban redevelopment, tax incentives and rebates for foreign investors, more equitable income distribution, and other social programs all benefited from the diversion of tax funds. The public's view of taxes as a tool of Big Government shifted as the latter became more despised. All of a sudden, cutting back on government, reducing its interference in the market, and lowering taxes as a percentage of GDP were all the rage.
All taxes are unfair. Coercion by the state is used to enforce them. They violate the universally recognized right to private property. One group of people—those who pay their taxes in a lawful manner—has their money moved to another group. Poor people, children, and the elderly are among the less desirable receivers since they either do not pay taxes lawfully or are involved in illicit tax avoidance. However, a tax evader can still benefit from the money that others have paid in.
According to studies, the wealthy and the middle class—in other words, the people who are least in need—reaped the lion's share of tax revenue. Plus, people from these socioeconomic backgrounds were more prone to engage in tax planning strategies aimed at reducing their taxable income. They were able to hire experts to assist them in paying lower taxes because their income was increased by the redistribution of funds from the poor and the less fortunate. So that the wealthy could pay less in taxes, the impoverished backed their tax strategies. It is hardly surprising that tax planning is seen as a way for the wealthy to avoid paying taxes. Ironically, taxes had the intended effect of reducing social polarization and friction, but they had the other effect.
In countries like Germany and France, where taxes consume as much as 60% of GDP, taxes have become the main deterrent to economic growth. I don't see the point of working for the government. Why should we let our tax dollars support the extravagant lifestyles of our politicians and overburdened bureaucracies? When the powerful and wealthy avoid risk, why should you?
An avalanche of criminal actions, all with the goal of evading taxes, ensued, with disastrous social and moral consequences. Entrepreneurial spirits created monstrous black economies. The procedures for making macroeconomic decisions, purportedly based on comprehensive economic data, were fundamentally altered by these unreported economic activity. Citizens already distrust their government for reasons unrelated to taxation, and this seeming absence of macroeconomic management just makes things worse.
The quantity of government expenditure has a negative correlation with economic growth, according to recent studies. The disparity between the wealthy and everyone else has been widening for decades, despite progressive taxation. Although the state has made massive unilateral transfers of funds to the lower socioeconomic classes, income inequality has persisted and is becoming worse with time.
Most people view taxes to be the root cause of: They skewed business strategies, promoted wasteful spending, and Invested in unorthodox ventures driven by tax incentives; Absorbed unacceptably big amounts of the GDP; Invested less internationally; Morally corrupted the populace, urging it to engage in huge unlawful actions; Had a negative impact on key economic indicators like unemployment, the money supply, and interest rates; Deprived the commercial sector of funds needed for its development by spending it on non productive political goals; Caused the smuggling of capital outside the country; The establishment of robust alternative, underground economies and the fabrication of financial records, which impede legitimate decision-making; Aided in the formation of large, ineffective bureaucracies to gather tax information and statistics on economic activity and income; Forced every member of society to - directly or indirectly - pay for professional services relating to his tax duties, or, at least to waste his own resources (time, money and energy) in engaging with authorities dealing with tax collection.

A member of the community should have faith in its institutions, but the trust has been destroyed by thousands of rules, tax loopholes, incentives, and what appears to be arbitrary decision making that is not subject to court examination. Governments were toppled more frequently than not as a result of the frequent eruption of scandals caused by a lack of openness and fairness.
If taxes had accomplished their main aims, all these exorbitant charges may have been tolerable. The most recent act of defiance stems from their inability to do so.
Global governments initially experimented with a handful of straightforward recipes:
By improving data collecting, processing, aggregation, and crossing, they hoped to increase the size of the tax base. The idea was that more people would fall into "the net" and pay taxes in this way. This was a colossal failure. No amount of repeated and rather simplistic tax campaigns could stop people from finding methods around this method.
After exhausting all other options, governments turned to regressive taxation. Taxes on consumption were essentially replaced by income taxes. Despite serious societal repercussions, this turned out to be a considerably more effective strategy. Legal loopholes were granted to the powerful few, following the same pattern. Companies can claim a VAT refund by deducting the VAT they actually paid from the VAT they were required to pay to the government, according to regulations in every country. These tax benefits were plainly not available to the poor, yet many of them ended up getting VAT payments paid to the destitute.
Furthermore, rising inflation figures were nearly instantly reflected in VAT and other consumption-based direct levies. Inflation, according to economic theory, is a kind of tax. Those who lack the necessary education, political influence, or wealth to defend themselves may have their purchasing power impacted indirectly. A tax would have the same impact on lower-class people's incomes as inflation would. The term "poor man's tax" describes inflation for this very reason.
Governments started over as the socioeconomic effects of regressive tax policies became clear. Both society and politics suffered under regressive taxation. Too many loopholes and not enough substances made progressive taxes resemble Swiss cheese. It was only natural to try to seal off the gaps: do away with special preferences, tax incentives, allowances, write-offs, reliefs, and a plethora of other deductions. Because of this, there were disagreements with interest groups whose goals were mirrored by the tax loopholes.
Being political beings, governments only gave it their all. They gave while simultaneously abolishing. After each move to close a loophole created a plethora of new ones, they skillfully sidestepped contentious issues. Everything seemed hopeless.
As a result, governments resorted to their last nuclear option: tax system simplification.
On the one hand, the concept is visually pleasing; on the other, it will abolish all tax breaks and loopholes. On the flip side, we will be reducing the number of tax rates and their respective magnitudes. Both the total number of tax rates and the marginal rate will fall sharply. Thus, fewer individuals will feel the need to cheat and fewer resources will be allocated to the process of preparing their tax returns. The government has decided it will stop using taxes as a tool to further its own political agenda. It will spread a system that is easy to understand, transparent, fair, and non-arbitrary, all of which will lead to increased revenue.
The governments of the United States and Germany are coordinating closely. They are attempting to quell a significant act of civil disobedience, which can be seen as a tax rebellion. Their failure will have far-reaching consequences for society. A better world might be ours to inherit if they are successful. People will still be furious when their tax dollars go toward illogical, pork barrel endeavors, because that is just how people are. So long as this persists, the government's never-ending pursuit of the citizen will also persist.
Wow, that's funny!

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