Is tax important to maintain social development?


Is tax important to maintain social development?

“Nothing is certain except death and taxes.” – Benjamin Franklin was correct when he assessed the inevitability of tax, an arguably painful burden on any human being. According to the IRS, the average American person paid $20,944 of income-based tax to the U.S. government in 2015, which translates into a huge 30% of their earnings. This daunting number is yet one of the only reasons world citizens associate taxation with fear, frustration, and in a lot of cases, injustice. However, while taxation has remained a contentious issue throughout the human chronology, it certainly is not a form of theft or tyranny as accused by many. In fact, tax is immensely crucial to the maintenance of social security and growth, which makes it essential to understand why this system exists in the first place, and the purposes it genuinely intends to serve.
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There was a time in the history of mankind when the law of the jungle was the ultimate law – as hunters and gatherers, the earliest human beings operated their communities without any sense of hierarchy and benefits. Then came the Neolithic Revolution, which marked the momentous shift of human societies from a forage-based lifestyle to an agrarian one. This ushered in a more established social structure – the centralized state – to serve the pressing issues of population increases, invasion, and civil order, hence the advent of governments. As a result, early taxation systems dating to as far as 3000 BC were founded in numerous cultures, including Ancient Egypt, the Persian Empire and the Roman Empire, where monarchs were either offered crops and livestock or forced labor as tax payment from subordinating classes. The succeeding era of market, trade and war witnessed the adoption of such systems by Britain and America, as taxes became more broadly imposed on land and property, and imports and exports. Subsequently, with governments calling on income taxes to offset wartime costs and revive their economies in the eighteenth century, duty became expansively levied on the mass instead of only on the upper class. Essentially, as humanity progressed into modern society, taxation has correspondingly evolved from a social instrument of asserting powers’ wealth and social status to a means of empowering the leaders of any state or nation in order to guarantee national security, social safety and economic growth. Despite playing a marginal role in the ancient world, it now represents an ample share of the national income and is geared towards sustaining the apparatus of government itself and amplifying the power and security of the nation as a whole.

How so? In the contemporary world, taxes are fundamentally “the price we pay for a civilized society,” as declared by American former jurist Oliver Wendell Holmes, Jr. More than just for reimbursing government workers, tax is accumulated from plentiful sources – be it income-based or consumption-based – to assist the government in fulfilling their duties to the citizens. On the one hand, it serves as a sustainable source of revenue for investing in social programs and public services. Indeed, in the absence of tax, quality education would not be accessible to the masses, neighborhood crimes would hardly be suppressed, the healthcare system would be all jammed up, and the retired and unemployed would endeavor in misery to make ends meet. Moreover, it would mean the disappearance of funding for energy and waste management, law enforcement, protection of human rights, national defense, and emergency reconstruction. Come to think of it, how else would Japan recover so swiftly from the catastrophic earthquake and tsunami in 2011 if not by a solidarity tax? On the other hand, a tax policy is a powerful weapon for a government to orchestrate the mechanism of its country: it functions as a means to build accountability for the administrators, redistribute wealth by addressing poverty and inequality, and promote public goods through the repricing of externalities like tobacco and carbon emission. It is possible to declare, therefore, that in case of being executed fairly and transparently, taxation is surely of paramount significance for the effective functioning of any government body and the stability of society.

That is not to say that the current taxation systems are free of flaws, however. The most persistent plight lies in the broken, regressive fiscal policy implemented by a myriad of governments, which ultimately contributes to an even starker wealth gap between the rich and the poor and leads to the endless debate on the system’s fairness. Even in countries as developed as the UK, this inequality is by no means reduced – statistics from The Equality Trust have recently disclosed gloomy news for UK taxpayers, as the poorest 10 percent of households are in burden of roughly 8 percent more in income taxes than the richest 10 percent. The problem is furthered as while the low-class remains inflicted by such unjust policy, those with the broadest shoulders benefit from this undeserved bias and even manage to avoid taxes on a regular basis to secure their financial position. On the other hand, it is noteworthy to mention that there are rampant cases of the power-holders abusing tax revenues and public funds for their own welfare. Let’s take Vietnam for example – it was reported by the Vietnam Chamber of Commerce and Industry that approximately a third of businesses in the country have been obliged by tax administrators to pay “informal bribes.” Such blatant fiscal corruption is not unfamiliar or novel to the developing world, unfortunately, and results in not only the degradation of the government’s liability and resentment from the already unwilling taxpayers, but also the alarming destabilization of the entire society.

Taxation has remained a political controversy ever since its establishment – and for most of the time, this is due to the inconsistencies within the governance’s internal frame. In other words, while the concept is inherently for the public goods, its execution necessitates much more strictness, transparency and justice. In the end, what matters is that governments are able to devise a progressive, equitable taxation system that truly takes their people’s benefits into account and serves to enhance life quality for a well-functioning society.
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