Buscar
  • Gabriella Orriols

There is no escape - Taxes

What is more inevitable than death? Taxes. Taxes have been implemented in our society since the dawn of time. Record of taxation dates to Ancient Egypt where they paid taxes in the form of livestock and labour. The payment of taxes appears in sacred texts, such as the bible, as well. No matter the level of advancement a society pertains to, taxes will linger. Although people scoff in discomfort at the thought of paying taxes, they do serve an important service.


“Taxes are what we pay for a civilized society” - Oliver Wendell Holmes.

We pay taxes to the government in return for the operation of public services, such as public schools and the police department. They serve all sorts of purposes; some taxes are implemented to skew certain behaviours, like raising the sales tax on cigarettes to minimize the consumption of tobacco. Placing higher taxes on gasoline is also considered a behavioural tax because not only does it drive the number of cars on the street down it lowers carbon emissions, which results in a cleaner and healthier environment. Taxes also serve the purpose of redistributing wealth from the rich to the poor. This occurs in income taxes. The higher income an individual receives, the higher percentage that individual owes in taxes. There are over ten specific taxes, but in the United States, economists classify the taxation system into three main categories: Regressive; Progressive; Proportional.


The first classified tax category is Regressive. Regressive taxes are applied across the board, meaning they hit lower-income individuals harder. Sales tax can be considered a regressive tax, while it is a flat tax that is equal no matter the monetary status an individual holds, individuals falling in the lower class may find it more difficult to acquire essential items due to sales tax. Individuals lying comfortably on a higher wealth status do not necessarily receive the same “hit” from purchasing necessities that less fortunate people feel, clearly since they have more money to spend.


Contrary to the whole point of regressive taxes, progressive taxes work to be more of a burden on the wealthy. A prime example of a progressive tax is income tax. As I mentioned earlier, income tax is different for everyone. The larger income you make, the higher percentage of tax you owe to the government. IRA calculates how much you owe in taxes; it uses marginal income tax brackets- based on the amount of taxable income you earned a year. Taxable income gets divided up into chunks that correspond to each tax rate, and you pay the associated rate on each of those chunks.


The last classified tax category opposes both regressive taxes and progressive taxes; proportional taxes implement equality in the tax system. Proportional taxes require the same percentage of income for all taxpayers, regardless of income status. A flat tax would be applied across the board for all citizens to pay. A flat tax is a constant marginal rate. For example, if income tax were considered a proportional tax, individuals would not be paying the same amount, but they would be paying the same percentage. If the percentage was 20% and person A received an income of $500,000, then person A would owe $100,000 in income tax, and if Person B earned $50,000, then person B would owe $10,000 in taxes. Economists argue that a flat tax is not as fair as it seems. Some say the flat tax has the possibility of shifting the total tax burden away from the wealthy to the lower and middle classes making the tax policy more regressive.