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    Question ID:   4255         Current Version: 1
Question: Why do I have to pay taxes?
Category: Business & Finance > Taxes
Keywords: reason, pay, income, tax, return
Type: why
Rating:(0 ratings)    Views: 762    Discussions: 0   In Watch Lists: 1  

 
    Answer:

Oliver Wendell Holmes, former Justice of the United States Supreme Court, said, "Taxes are what we pay for a civilized society." In some respects, a "civilized society" is the rationale for government in the first place. The signers of the Declaration of Independence set out to establish a new form of government for the "protection of life, liberty, and the pursuit of happiness". To this end, the framers of our constitution enumerated the proper fiscal functions of government as "to pay the Debts and provide for the common Defense and general Welfare of the United States". Taxes are simply the preferred method for paying for these governmental functions, the other methods being the issuance of public debt and the issuance of money.

Although people work hard to meet their needs and the needs of their families, there are some things they cannot purchase themselves. For example, the taxes paid to state and local jurisdictions help pay for police and fire protection. These taxes also pay for the operation of the local governments, and for local recreation areas such as parks and other public facilities.

On the national level, Federal income taxes help pay for defense for the country. They also pay for capital facilities such as highways and other transportation services, and for help for those who are poor or ill. These are all services that individual citizens cannot purchase the way they can buy food and clothing and the other necessities of life. When people live together in a society, all of its citizens must bear the cost of providing such services. Taxes are the means by which the society raises the money to cover these public costs.

Justice Holmes' famous quote establishes the propriety of taxation, but it tells us nothing about the form or levels of taxation, and, indeed, matters have changed significantly in both regards over the years since his pronouncement. For example, in 1902 the Federal tax burden stood at 1.3 percent of Gross Domestic Product (GDP). A century later, the federal tax burden had risen nearly 20 fold, to 20.8 in the year 2000.

Taxes perform another important role besides funding government activities. Taxes also provide citizens with basic information regarding the total price for those activities. Government has become a dominant factor in our economy, absorbing significant resources for its purposes and redirecting many more resources through its regulatory policies and through a mixture of taxation and spending programs that remove resources from some areas to transfer those resources to other areas. It is critical, therefore, that citizens have as much information as possible regarding these diverse programs and regarding their aggregate totals so they may decide for themselves whether the government's activities are appropriate. Taxes, and especially the paying of taxes, yield citizens a personal sense of the total price of those activities.

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    More Readings :
[QID:4278]    I work part time while I go to school and my employer takes taxes out of my paycheck? I'm not old enough to vote, but have to pay taxes. Isn't this a form of taxation without representation?  
[QID:4280]    I filed my tax return last year but have not yet received my advance payment check. How long should I wait before checking on it?  
[QID:4266]    Why does the Government collect taxes on tips that I receive? This is not part of my salary.  
[QID:4258]    I'm not married but maintain a home for myself. Why can't I file as head of household?  
[QID:4256]    Why can't I deduct "personal" interest expenses for tax return when I purchase a car, or for the interest on my credit cards?  
[QID:4259]    My spouse passed away and now I must file as single instead of married. Because a widow or widower still maintains the home, wouldn't that be considered head of household for tax purposes?  
[QID:4262]    Why am I required to pay taxes on my unemployment compensation benefits?  
[QID:593]    If you are self-employed, who pays the social security act and how social security tax is paid?  
[QID:4265]    I think that students should be exempt from paying taxes. Wouldn't this be a way of helping children save money for their education?  
[QID:4363]    What is NBA luxury tax?   - No answer
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