As responsible citizens, we need to examine the facts of the Fair Tax ourselves. Our team also supports you with guidance throughout the year to help ensure you achieve your defined financial objectives. An exportable tax is one that is at least partially paid by these non-residents. The cost of tax collection should be lower than the amount of tax collected. The purpose of a good tax system for a developing economy is not merely to raise revenue for the Government but also to ensure that burden of taxes falls more on the rich. In other words, what various tax rates should be levied on people with different levels of income, A good tax system must be such as will ensure the horizontal as well as vertical equity. Similarly, there must also be certainty of revenue that the government intends to collect over the given time period.
They see the system as placing a more significant burden on middle-income earners to carry a large portion of government spending. Thus taxation in a developing economy has not only to restrain current unproductive consumption but also to check the large increases in consumption when with the increase in national income, economic surplus goes up. Adequacy means that taxes must provide enough revenue to meet the basic needs of society. On the basis of this canon of equality or ability to pay Adam Smith argued that taxes should be proportional to income, that is, everybody should pay the same rate or percentage of his income as tax. That is to say, the taxes imposed should be more or less equitable, convenient to pay, economical, certain, productive, flexible and simple as far as possible. A good tax system is expected to facilitate the use of fiscal policy to achieve the goals of a stability b economic growth.
Taxation must cope with the changing needs of the modern government. Noun The decision was made to raise taxes. Moreover, related legislation would repeal the Sixteenth Amendment, which means the federal government would no longer have the right to levy income taxes. Taxation should be used to finance public services. Complexity also makes it harder for governments to monitor and enforce tax collections, and makes it easier for lawmakers to enact and conceal targeted tax breaks benefitting particular groups.
The cost of home ownership, then, could significantly rise for homeowners who currently itemize and have large interest payments. Our tax system should not penalize or subsidize imports, exports, U. If land revenue is collected at the time of harvest, it will be convenient since at this time farmers reap their crop and obtain income. For example, they should not be so high thatthey discourage peop … le from working. The tax administrators should be tactful, courteous, remain impartial and be alert all the time to avoid any evasion and avoidance. These canons are still regarded as characteristics or features of a good tax system.
By discouraging or restraining consumption, especially of non-essential or unproductive type, taxation can pay a useful role in controlling inflation in the developing countries. A good tax system should not hamper the development of trade and industry, but instead help the rapid economic development of the country. Though the prebate is geared toward poorer families, everyone would receive monthly checks, regardless of income. Therefore, even for achieving economy in the tax collection, the taxes should be as simple as possible and tax laws should not be subject to different interpretations. In other words, through the means of taxation consumption should not be allowed to increase in proportion to increase in incomes.
. Taxation as in Instrument of Economic Growth: In a developing economy such as ours, taxation should serve as an instrument of economic growth. However, this may not be the case. However, this sort of equality robs of justice because not all taxpayers have the same ability to pay taxes. In proposing the above mentioned canons of taxation, he was guided only by the sole objective that Government should be able to raise sufficient revenue to discharge its limited functions of providing for defence, maintaining law and order, and, public utility services. Theoretical justice- in consonance with the constitutional provisions that the rule of taxation must be equitable burden falls on those better able to pay , and uniform.
The time of payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributor and to every other person. This implies that people who are better-off should bear more tax burden than those who are worse-off. The state cannot raise sufficient revenue and, at the same time, please the tax payers. Any tax that involves high administrative cost and unusual delay in assessment and high collection of taxes should be avoided altogether. The best way to create a truly equitable system of taxation is to demand hard facts over catchy soundbites and empty promises.
Therefore, a tax system may do less economic damage if it raises moderate amounts from several bases rather than large amounts from one or two. Tax system is a legal system for assessing and collecting taxes. Proportional and regressive taxation should be avoided as far as possible. This is because if a Government tries to get large revenue from a single tax or few taxes, it will have to raise the rates of taxation too high which will not only adversely affect the incentives to work, save and invest but also encourage evasion of taxes. The imposition of excess burden should be minimized 3 At the same time, taxes may be used to correct inefficiencies in the private sector, provided they are a suitable instrument to do so 4 Tax structure should facilitate the use of fiscal policy for stabilization and growth objectives 5 The Tax system should permit the efficient and non-arbitrary administration. The law should be clear and specific; tax collectors should have little discretion about how much to assess tax payers, for this is a very great power and subject to abuse.
Bastable, taxes must be productive or cost-effective. But equity must not hamper productive efficiency such that burdens should be provided to correct inefficiencies. Variations of the proportional tax include allowing mortgage deductions and setting lower income levels. It is not just a means of raising revenue for the limited functions of the State. Vertical equity is just as important, however.
To make the tax system sufficiently productive it should be broad-based and both direct and indirect taxes find place in it. Because the capital gains tax would be eliminated, individuals who can afford to invest will enjoy tax-free compound growth. What makes filing taxes more complicated — and makes the tax forms longer and longer each year — is the proliferation of special tax breaks. Example: Height tax is unfair. But a tax authority must go on maintaining relentlessly the above canons of taxation so that a near- ideal tax structure can be built-up. Rules are well known and fairly simple, forms are not too complicated, it is easy to comply voluntarily, the state can tell if taxes are paid on time and correctly, and the state can conduct audits in a fair and efficient manner. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels.