The purpose of taxes

If there is one thing that many people hate, it is paying their taxes to the government. If this were voluntary, very few people would pay their taxes to the government. For this reason, a good number of people don’t really see the importance of taxes, but rather see government as this institution that is hell-bent on sucking every drop of their blood until they drop dead. In this article, we’re going to look at the purposes of taxes, so you can be better informed yourself about the role you’re playing in paying your money back to the government.

Government revenue source

The first reason corporations are taxed is simply because the government needs money to stay afloat. And although there are a number of governments in the world that are highly dependent on other sources of income, like investments in corporations, etc., tax revenue is one of the most reliable, and it is the one that most governments use for their needs. bills. With this money, they can build roads, schools, employ civil servants, etc.

Resource Redistribution

The other reason that governments tax citizens is because these governments want to use taxes to redistribute resources. As most people already know, one of the most important principles of taxation is the principle of fairness. In this sense, you will find that the government can get money from the rich and then use it to pay the poor some unemployment benefits.

Economic politics

Lastly, the government can also come up with very good policies simply by tinkering with the tax system. If the government wants to reduce aggregate demand in the economy, it can do so by making sure to tax people heavily to avoid inflation. On the other hand, if the government wants to ensure that there is more aggregate demand, it can do so by reducing the amount of direct taxes so that taxpayers can have the opportunity to spend their cash on basic products.

It is important to note that the purposes mentioned here are not just stand-alone policies. At the end of the day, the different purposes will be able to interact with each other.