12-09-2017, 11:28 AM
All developed and less developed economies have a fiscal system that finances their governments, at least in part. The design of this tax system reflects the society's view of the responsibilities of the government and its citizens for its government.
In the United States, there has always been disagreement over the role of government as a producer and protector of the economy and its citizens. Even before the United States was a nation, the "tax without representation" was a cry of protest for the rebellion against British colonial authority, and settlers protested against taxes on everything from stamps to tea. The American revolution referred to both economic democracy - the fundamental right of every individual to participate in the economy and to possess the fruits of labor - as was political democracy.
It is perhaps no coincidence that the wealth of the nations of Adam Smith was published in 1776, the same year that independence was declared in the thirteen colonies. Smith recognized a role for government in a market-based economy, but societies have discussed what that role should be and how it should be paid since then. The US tax code is based on the idea that everyone should help finance the government according to their ability to pay. Changes in how "everyone" is defined and how "repayment capacity" is measured have led to changes in tax law that keep the system in evolution.
In the United States, tax laws are written by Congress and therefore through commitment. As opinions about government funding have changed, tax laws have been amended and refined, promulgated and repealed. The result is a tax code that may seem overly complex and even unreasonable or illogical. However, the system is based on logic and has a purpose. The better you understand the elements of the tax system, the better you will understand how to live with it and plan it to its best advantage.
In the United States, there has always been disagreement over the role of government as a producer and protector of the economy and its citizens. Even before the United States was a nation, the "tax without representation" was a cry of protest for the rebellion against British colonial authority, and settlers protested against taxes on everything from stamps to tea. The American revolution referred to both economic democracy - the fundamental right of every individual to participate in the economy and to possess the fruits of labor - as was political democracy.
It is perhaps no coincidence that the wealth of the nations of Adam Smith was published in 1776, the same year that independence was declared in the thirteen colonies. Smith recognized a role for government in a market-based economy, but societies have discussed what that role should be and how it should be paid since then. The US tax code is based on the idea that everyone should help finance the government according to their ability to pay. Changes in how "everyone" is defined and how "repayment capacity" is measured have led to changes in tax law that keep the system in evolution.
In the United States, tax laws are written by Congress and therefore through commitment. As opinions about government funding have changed, tax laws have been amended and refined, promulgated and repealed. The result is a tax code that may seem overly complex and even unreasonable or illogical. However, the system is based on logic and has a purpose. The better you understand the elements of the tax system, the better you will understand how to live with it and plan it to its best advantage.