Concept of taxation, Macroeconomics

The Concept of Taxation is explained below:

Taxes are the general purpose, compulsory contributions by people to the public treasury (or national exchequer) to meet the expenditure requirements of the government. Without charging the taxes, the government would not be able to deliver services like law and order, national defence public administration, free or subsidized health and education etc.

As the taxes interfere with market mechanism, they are considered distortionary, and as such there is the long-standing debate over the desirability of the taxes charged. In a way, the stance over taxation describes the economic “right” and “left” in the HICs. The market-friendly right (such as the Republicans in the U.S. or the Conservatives in U.K.) believe in decreasing the size of the government and its spending so that most of services in economy are given by the private sector. As such they can fall out for lowering taxes (since government spending is quite less) which is according to them distorts the private sector incentives (remember that the Monetarist argument for removing income taxes in the context of unemployment). By  contrast, the interventionist left (such as the Democrats in the U.S. or the Labour in U.K.) consider that a large and active government essential for delivery of the better public services and thus are often against cutting taxes and transferring the responsibility of providing these services to private sector.

The Debate over Taxation is explained below:

There are two the dimensions to the debate over taxation which are: 

1)equity, and the other one is 

2) efficiency

Posted Date: 7/19/2012 3:13:22 AM | Location : United States







Related Discussions:- Concept of taxation, Assignment Help, Ask Question on Concept of taxation, Get Answer, Expert's Help, Concept of taxation Discussions

Write discussion on Concept of taxation
Your posts are moderated
Related Questions
1. Consider a natural monopoly. I. Show graphically and discuss how price and quantity are set by the natural monopolist. II. Define the areas corresponding to the consumers'

Separation of growth and fluctuation It is very useful to separate the evolution of a variable which grows over time into a trend and fluctuations around the trend. The graphs

Inflation in Sweden Figure Inflation in Sweden 1830 - 2010. Source: SCB. There are four aspects which are interesting when we look at inflation data for Sweden

Burwood Mining is raising capital of $500,000 for its next project from the following sources: Sources Amount $ Common stock 100,000

Question 1: "Motivation denotes to the degree of readiness of an organism to pursue some designated goal and implies the evaluation of the nature and locus of the forces, inclu

1. An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is equal to A) The cost of bait and any other monetary expenses. B) Zero, becaus


Q. Consumption function in the AS-AD model? Consumption. Suppose that P increases by say 10% whereas real GDP (Y) is constant. Nominal GDP and nominal national will now have

Consider the following macroeconomic model: Y = C + I + G + NX C = 100 + 0.8 YD I   =  300 - 1000 i NX =  195 - 0.1 Y - 100 (E.R.) E.R. =  0.75 + 5 i M  =  ( 0.8

Economists estimate the short run elasticity of demand for a Chipotle burrito is -2.25. i)    What degree of elasticity does Chipotle burritos exhibit? ii)    A 1% change in