Effects of Taxation on Financial Policy

Taxes for everyone except the government are seen as the “bad guy”. Taxes are charges or fees that the government requires you to pay in order to live in their country. With this money, the government uses it to compensate for financial activities such as education, roadwork for freeways, highways and everything in between, and much more. Even though everyone understands the importance of it, at the end of the day, no one wants to pay one-third or more of their income to tax. We know most people need to pay their taxes; however, the biggest issue in recent years has been how much we need to pay. There has been pressure on forcing high-income households and individuals to pay much more than low-income families, while others say everyone should be treated the same. It all comes down to politics, down to the “he said, she said” and what happens when no one can compromise? That’s right, government shutdown.

As mentioned before, taxes are not well liked among the general public. Whether you look at everyone as a whole or individually, people see taxes as money that did not stay in their pocket. For people who like to save their income or the “savers”, they see their money going in someone else’s pocket, cash they could not save up to maybe one day buy a house or a new car. For the “spenders”, it is different. It is all about realizing the money you could have spent on yourself is going to the government to pay for needs you may not seem necessary or want to be a part of. It seems in many ways, the consumers and the producers are fighting the same battle. Producers want to sell their goods and make a profit off of it and consumers want to buy those goods and are willing to give up their money to receive the product. No one wants to really think about the tax issues, the wedge between the supply and demand. Unfortunately, they both have to make pay up. With that, a problem may appear; if the producer raises the prices too high to make up or the tax, they could lose a...