A tax is a payment or more precisely a fee that is paid by businesses and individuals to the government. The taxes are usually paid in cash. The funds collected via taxation are usually used by the government to fund various public spending ventures. Let us have a look at the different reasons for why we are taxed and the different places where this money is spent by the government.
Most of us have seen our fathers and other family members pay tax every year but hardly any of us have tried to know the reason for it. The government has been collecting taxes for many different purposes. The main and the primary purpose or an answer for why we are taxed is for the benefit of general public.
There are many reasons for which we are taxed by the government. These are:
* To support different governmental operations
* To improve and influence the performance of the economy
* Let the government perform different functions like national defense and several such services properly
* To redistribute the resources between classes or individuals in the population
* To make the life of the common man more comfortable by providing them different amenities and latest technologies
* To modify the patterns of employment and consumption in an economy by making the classes of transaction less or more attractive
In plain and simple terms, the money taken from us via taxation is used by the government in a number of activities that make sure that we citizens have access to a variety of amenities and facilities. On a broader perspective, the money collected via taxes also helps the government to maintain a certain level of equilibrium in the economy with regards to prices and costs.
Mostly the uses of the money we pay as taxes is seen when we see crews building roads and bridges. There are also other places where this money gets spent. These funds go towards maintaining schools, libraries, police and fire services. These funds also help pay the salaries of the government employees. The money thus collected is also used to build and maintain public buildings. Several health services and pensions are also funded by the tax money paid out by us. One more use of the money collected via taxes is to help in the maintenance of the defense services of the country.
There are also a number of other means via which the government collects funds for maintaining the public services that it provides. For example, when we pay a toll for using a stretch of the freeway, we are also contributing towards helping the government in keeping the road in good order. This kind of a payment is also a type of tax that we pay to the government.
Ideally, the funds collected from us via taxes are supposed to be equal to, if not more than the expenses incurred by the government. However, more often than not, such is not the case. The government usually ends up spending more than what it receives. This is probably the reason why the government has to borrow funds to remain afloat, and yet another reason why we should pay our taxes on time!
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