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Taxation plays a crucial role in every economy. It is even used to rebalance income equality, to finance the government’s development plan. At the micro-level, the tax system has a fundamental influence on businesses and citizens. Through tax voluntary training, I have learned a lot about how underprivileged people’s lives depend significantly on tax policies. In this discussion, I want to reflex on what I have done during the training, the importance of taxes in society, and lastly, to what extent taxes help to alleviate U.S poverty and enhance the healthcare system.
As a basic volunteer, our responsibility is to fill in the intake form with clarity and completeness.
Rather than being given every information needed to feed into the computer software, we need to ask clients questions, but it is not just that simple. Some clients may have no idea about the question being asked, or even worse, some think they do but they actually got it wrong.
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Therefore, we need to go back and forth between clients and supervisors to take as much information on the paper as we can. I have to talk to the clients, ask them questions beyond the paper such as childcare costs, money spending on books and other college life costs to which they don’t need proof, and in most case, they don’t. I also need to deal with customers who are tired of doing tax (or other reasons), frustrated when they see a negative refund, or even angry as they are repeatedly asked about sensitive questions when the reviewer or I want to confirm their information.
However, I realize that being a patient definitely helps.
In a democratic society, Americans freely choose how to invest their time and money. The ultimate goal of organizations or manufacturers is generally to make profits by satisfying consumer needs. Open competition among producers usually results in their providing the best quality of goods or services at the lowest possible prices. However, the free enterprise system has a limitation on providing some services that are more efficiently controlled by the government. The best examples are national military defense and public services. When it comes to the whole community’s benefits, single organizations or even a group of organizations cannot guarantee that the public benefit will be prioritized over the group gains. Other examples are the management of our natural resources, especially the limited resources such as water supply, electricity, coal mines, natural species, and so on. In those cases, the most practical way to pay for them is through taxes, instead of a system of service fees. Taxes are collected to pay for planning these services and to finance construction or maintenance.
There are several sources of taxes. First, the Federal Government taxes earnings of both individuals and corporations, which are also known as income taxes. Second, sales taxes also come from consumption such as shopping and entertainment. Another good example of this use of excise taxes is the gasoline excise tax. Governments use the revenue from this tax to build and maintain highways, bridges, and mass transit systems. On the other hand, some items get taxed to discourage their use. This applies to excise taxes on alcohol and tobacco.
Society benefits from a safe and healthy environment. In the open system, however, businesses have little incentive to pay the extra resources or efforts for maintaining this kind of environment, especially when competitions are inevitable in any industry. Therefore, it is essential that the government imposes regulations on producers such as auto manufacturers, who must install air pollution controls. The side benefit of government-controlled public resources creates competition among businesses, hence yields better outcomes for the consumers. This is particularly true for some services which more efficiently provided when there is competition. The best-known examples are the so-called natural monopolies: utility companies, which provide water, natural gas, and electricity for home and business use. Since there is no competition, government agencies carefully regulate the services, prices, and profits of the utility companies.
Taxes are also important to fund healthcare services for the elderly and financial aid for the disabled and unemployed, social services for low-income individuals and families. Recent reports show that the Americas still suffer from poverty at a rate as low as it was in the War on Poverty since the 1960s, with about fifteen percent of Americans live in poverty. The rate in 1966, for instance, was 14.7 percent, even rose to 14.8 percent by 2014. Currently, the rate stays at 12.3 percent, which is still very high. However, we should be simply fooled by those statistics. Taking a careful look at the matter, an officially poor family of four has an income of about less than or equal to twenty-five thousand of dollars. That is barely surviving amount, but that measure fails to take into account taxes. The poor mostly don't pay taxes. In fact, many get money back through the Earned Income Tax Credit and other income-support programs, which enable officially poor households to boost their incomes, in most cases significantly. For example, a single mom, who earns twenty thousand bucks, with one child, may get eight thousand worth of refund, which is nearly half of her annual income. This is not to neglect the difficulties the poor need to overcome but to say that the tax system actually works.
Taxation also plays an important role in healthcare financing and make healthcare available to everyone. The problem, however, is that in those industries with slow productivity growth, real wages also have to rise so as to attract people to become join those industries’ workforce. On the other hand, costs often rise faster than productivity, so prices have to rise as well. Typical industries with slow-to-moderate productivity growths are education and healthcare. That is why university tuition and health care costs have been beaten the overall inflation growth. This is the basic problem with market-based approaches to our health care problem: in a free market, poor people won’t get any, and middle-class people won’t get very much. At the current level of inequality, many actual families won’t be able to get the care they need. The dilemma is that everyone needs health care, but the law of productivity increases dictates that it gets more and more expensive. As it now boils down to public benefits, the solution is to get the government burdened part of the costs to keep prices at an affordable level. As we know, that is the purpose of taxation: distribute the costs, somehow indirectly through income taxes for example, to taxpayers through a progressive tax system.
Tax policy always poses difficult questions to policymakers because it needs to adapt to the socio-economic status-quo. That is why different countries have different tax system and policies. Even within a countries, tax policies often raise a hot debate for the presidential candidates because they relate to every aspect and segment of the economy. In hindsight, people’s lives have been improving over time, which is a signal that the tax system is working properly.
My Experience of Volunteering in Taxation. (2021, Dec 13). Retrieved from https://studymoose.com/my-experience-of-volunteering-in-taxation-essay
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