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A major question in ecomomics is taxation. The question of what is and is not a tax can get complicated, but is more of a political than an economic question. A tax is essentially a mandatory charge or levy the government imposes upon a citizen or resident of a political entity. Historically taxes were imposed in various ways, such as a corvee or paymrnt in labor or payment in products, commonly part of an agricultural harvest. Since the Industrial Revolution and the development of more prosperous capitalist economies, taxes have generally involved money payment. A tax is generally thought of as a revenue raising methods, but revenue is not always the primary purpose of a tax. Chief Justice John Marshall famously observed in the McCulloch v. Maryland (1819) decesion that the "the power to tax is the power to destroy." In this case it was a political effort to destroy the Bank of the United States. The Liberal movement of the 19th century was largely an effort to end the high taxes and other restraints on economic activity imposed by the largely monrchial governments of the time. Taxes are also used for social engineering, political efforts to advatage one group at the expense of another. Since the Progressive Era in America, many tax rates have been progressive, meaning that higher income people pay a higher tax rate than low income earners. This is also common in Western Europe. Top marginal tax rates in America have been as high as 92 percent (1952-53). This has been a major tool of liberals seeking 'social justice'. It is widely assumed that higher tax rates will increase revenue that the government can use to finance social welfare systems. This often is not the case as higher tax rates often not only result in lower tax collections, impede economic activity which also lowers tax collections. Even so, many liberals influenced with socialist ideology continue to push for higher taxes because of a virtually religious obsession with lowering the income of the wealthy regardless of the impact on low-income earners. President Obama whenbquestion about whether higher taxes would actually increased revenues, explained that there were other important considerations and that it was a 'matter of equity'. This obsession is often compounded by the fact that socialist economic policies generally fail to raise the very low-income earners they seek to aid. This has proven true of not only the Communist countries, but also the welfare state of Western Europe. Because of the widespread acceotance of socialist economics, rarely do modern governments set taxes at a rate designed to maximize the collection of revenue.
A major question in ecomomics is taxation. The question of what is and is not a tax can get complicated, but is more of a political than an economic question. A tax is essentially a mandatory charge or levy the government imposes upon a citizen or resident of a political entity. This could be all levels of giovernment from the national government down to a municipality.
Historically taxes were imposed in various ways, such as a corvee or paymrnt in labor or payment in products, commonly part of an agricultural harvest. Since the Industrial Revolution and the development of more prosperous capitalist economies, taxes have generally involved money payment. There are a range of taxes: including
income, sales, property, excise, capital gins, and others. A major tax in the European Union is the valuae added tax (VAT).
A tax is generally thought of as a revenue raising methods to finance government. But revenue is not always the primary purpose of a tax. Chief Justice John Marshall famously observed in the McCulloch v. Maryland (1819) decesion that the "the power to tax is the power to destroy." In this case it was a political effort to destroy the Bank of the United States. Taxes are also used in law enforcement. The Liberal movement of the 19th century was largely an effort to end the high taxes and other restraints on economic activity imposed by the largely monarchial governments of the time. Taxes are also used for social engineering, political efforts to advatage one group at the expense of another. Since the Progressive Era in America, many tax rates have been progressive, meaning that higher income people pay a higher tax rate than low income earners. This is also common in Western Europe. Top marginal tax rates in America have been as high as 92 percent (1952-53). This has been a major tool of liberals seeking 'social justice'. It is widely assumed that higher tax rates will increase revenue that the government can use to finance social welfare systems. This often is not the case as higher tax rates often not only result in lower tax collections, impede economic activity which also lowers tax collections. Even so, many liberals influenced with socialist ideology continue to push for higher taxes because of a virtually religious obsession with lowering the income of the wealthy regardless of the impact on low-income earners. President Obama whenbquestion about whether higher taxes would actually increased revenues, explained that there were other important considerations and that it was a 'matter of equity'. This obsession is often compounded by the fact that socialist economic policies generally fail to raise the very low-income earners they seek to aid. This has proven true of not only the Communist countries, but also the welfare state of Western Europe. Because of the widespread acceotance of socialist economics, rarely do modern governments set taxes at a rate designed to maximize the collection of revenue.
Most countries today calculate taxes by first assessing what is needed to finance government programs. Most democratic countries are unwilling to approve taxes to support the generous social welfare systems and entitlement programs that socialist politicans have promised. The result is very high levels of debt that many countries are now finding they can no longer sustain. The European Union is in the midst of just such a crisis and the United States is approaching the very same priblem. Increasing taxes to reduce the debt load will affect economic growth and thus reduce tax revenue. Cutting government programs is unpopular and potentially destabilizing. No country that we know of has attemoted to calculate what taxes an economy can sustain without retarding economic activity and then planning government programs to meet the most urgent needs around this level of taxation.
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