Disadvantages of Taxation:
- Putting in place an income tax system is quite difficult, especially when trying to control the wealthy and companies.
- Wealthy people benefit from tax evasion and dishonest avoidance because they can afford to pay for expensive tax "help." Warren Buffet, the famed investor, has been quoted as saying that it is unjust that his secretary pays 30% in taxes but Buffet only has to pay 17% on his income.
- Some contend that an earnings tax, regardless of its level, may cause financial hardship for people in the lower middle class and lower social classes. Any reduction, no matter how minor, can cause households that are barely making ends meet to significantly lower their standard of living.
Advantages of Taxation:
- The income tax enables progressive taxing based on your income. In terms of percentage, a person making $15,000 a year will pay less than a person making $150,000 a year. This method of wealth distribution works well.
- The existing arrangement also provides the government with a reliable source of income.
- An income tax creates a discrepancy between the value of a person’s work and what they actually receive (disposable income).
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