Income Tax- Pros and Cons.

25 04 2011

(Aparently I didn’t get to posting this, I could have sworn I had, my mistake

Regards,

Unicorns Everywhere)

PROS:

Fairness: Canadian income taxes are a progressive tax based on marginal income and tax brackets. Simply put, your income is put into levels and then you are charged accordingly. Because of this those who make more income then others are taxed more and conversely those who make less are charged less. Because the heaviest burden is put on the backs of those who can afford it the most, the system works to achieve a level playing field for all.

We all remember those times in monopoly where your jerk of a friend lands on the Income Tax square and decides to count up all his assets and take off 10% instead of paying the $200. Yeah, that’s income tax.

Quick to impliment: From a government standpoint, because the reaction of the public is so quick, the government can quickly lower or raise taxes in order to achieve certain results. For example, in a government deficit, the government can raise taxes in order to quickly gain money in order to pay these loans off.

“Mr. President, we’re in a deficit” “Shut. Down. Everything.”

Stability: Income taxes are imposed on everyone who earns income, but unlike other kinds of taxes, they are relatively stable. For example, in an depression, the unempl0yment rate may rise to 10% and even then, the government will still gain money off of the other 90%. Because of this, the system does not take as much of a hit as other taxes.

Benefits to society: Sure, you may be paying through your nose with these taxes, but at least our parks are pretty.

CONS:

It’s taxes: Taxes are solely based on government benefit. From an economic standpoint, we know that because we are taxed, we lose money to spend which in turn affects the demand curve of all products. Because consumers don’t have money to spend, the economy generally falls with higher taxes.

Loopholers: When you have taxes, you have people who don’t want to pay taxes. People exploit the system by using loopholes, cutting money or just not paying them. Because of this, Revenue Canada has to hire over 90,000 people trained in auditing who simply revise the taxation system to make sure that it is air-tight and impossible to scam. These thousands of people could easily be put into better use and are an example of implicit costs (HEY MRS. CUTTLE, I’M LEARNING.)

Inconsistent Taxation: One gripe many people tend to have with income taxes is that it’s inconsistent. Warren Buffett, one of the world’s richest investors is only submitted to 17% tax, where his secretary has to pay 30%. The unfairness of the system tends to outrage people and because of the huge amount of people being taxed, there is very few resources able to be allocated to dealing with case-by-case basises.

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