Why Are Taxes Needed? Where Do Taxes Go? The Concept and Origin of Taxes.

For the layman, there is always some confusion about why taxes are needed. Comparing your hard-earned income with the spending of government agencies, the thought can strike your mind that your contributions to the treasury are somewhat overestimated. However, when you give a deep thought about the payment’s purpose, it becomes clear why such a world order is mandatory.

History of Origin

In the last vicennial, many people accepted paying part of their annual income to replenish the treasury. Every county resident must understand why taxes are required and is obliged to periodically pay out a small amount for the development of education, medicine, and strengthening their defense force. History has taught us that a society is unable to function normally without a regular cash flow.

The valuable function of taxes is apparent, although not very pleasant for some residents. In the early days, at the expense of taxes, the crazy ideas to conquer the world were imagined. However, there were also positive countries in history, in which medical, education institutes were created, care for the general population was carried out, and orphanages were built.

For the normal functioning of state organizations, it needs a constant flow of funds. In addition, the more socially valuable policy is implemented, the more substantial the payment percentage of the treasury becomes. Why use the Online Income Tax Calculator when the officials can print the required amount of funds themselves? The answer to this question lies in the analogy of the comparison with the separate internal structure of the population. Let’s consider the utilities and housing sector.

Similar Payments

We will try to answer why the government needs taxes by considering an example of one multi-story building. In most cases, utility charges are paid monthly. Also, everyone is well accustomed to the need for such requirements and closely follows each receipt item. Money is paid for garbage collection, cleaning, heating supply, gardening, maintenance of the social structures, and communication in general conditions.

The absence of such payment mechanics threatens the life of apartment dwellers and also makes it hard to maintain the society premises. On the other hand, regular monthly payments allow people not to worry about such menial but necessary tasks and focus on more important things. So the government takes upon itself the primary concern of maintaining peace within the society while offering assistance to the weak and sick. The country’s external threats also make it necessary to maintain a substantial army to save its population from various opponents.

In all the countries, there are taxes, because the state can only function properly if they are available. Where do taxes go? It’s the job of the leadership (elected by a majority of votes) to distribute material resources evenly.

Statehood

In a developed country, residents understand where their taxes go. Each resident feels their effect on their everyday life by means of social needs, medicine, and education. The payment of taxes is fixed by revenue authorities. In addition, the constitution obliges everyone to pay taxes up to a specific amount annually and immediately in special cases.

The tax system works on the rules of prosecution if these requirements have been breached. Such responsibilities fall on a separate structure: the Central Board of Direct Taxes or tax office. The treasury is entirely owned by the citizens, which has entrusted its exclusive rights to the group of persons elected by the people’s mandate. While paying an obligatory amount, a citizen must look at it as payment of services provided by the government.

Currently, the modern tax system is as imperfect as it was before. There are various nuances of payment and their calculation method. The substantial amount depends on the living standard, the cost of goods and services, as well as the utility charges.

Obvious benefits of fee

The requirements for taxes and economic essence lie in the society’s development as a whole. The modernization process of older objects and structures is in full swing. Such a working mechanism should never stop because the essence of life is movement and change.

It is generally unclear why a citizen must pay taxes if he’s not receiving a dime from the state. The answer will be the same reason: thanks to conscientious residents, society exists. If people are evading this primary duty, this suggests that the supervisory authority – the tax officials – are not working well.

Whether people will not follow the legislative base – depends on every resident. The lack of participation in public life provides an image of an alienating power from the people. Nowadays, everything is in the hands of people. If they were not indifferent to the state’s fate, it would be impossible to evade responsibilities.

Change in Fees

Unfortunately, the economic model of every country is built depending on the laws of life: everything constantly changes and refuses to a standstill. This is the reason tax rates are being increased. Society is steadily developing, and every day someone needs to compensate for development. Buyers need to pay extra for everything, and, in turn, they are also required to cover the losses. The chain of the event is chaotically stretching across businesses, organizations and, as a result, finds its way into the government agencies.

The governments need to raise taxes unwantedly to equalize the cash flow balance. Such a complex process is developed by people themselves. Still, the general opinion is the same: “the state intentionally rips off the general population”. Misunderstanding arises from narrow thinking. If you consider the issue more generally, it becomes entirely clear why the government levies taxes.

Domestic Policy

To find out why and how much the government needs to collect taxes, it is necessary to consider what are the primary expenses of a government.

• Community and housing services (partially compensated from the budget).
• For proper functioning of the courts and government agencies: consumer protection, state employment services, social committees.
• Medical institutions: hospitals, clinics, nursing homes, sanatoriums.
• Educational institutions: schools, colleges, universities, research centers, academies.
• Cultural institutions: monuments, museums.
• Defence departments: police, secret services, army, prosecutor’s office.

There is also a more elaborate list of government expenses that are covered by taxes. Such things include helping in the event of natural disasters, assistance to neighboring countries, and foreign policy.