Effects of Taxes

A detailed Summary of Effects of Taxes

Taxes are needed in order to securely administer and fund different governmental organizations, as well as construction and other universal infrastructure services. Many proponents of taxes suggest that taxation is way too extreme within the present day economic trends that exist within America. Taxes do fund many programs and construction of certain projects within America, but also effect certain aspects of America's economy. Taxes do present positive as well as negative characteristics within an economic system. Increased taxes do have a direct effect toward consumers, businesses, and the overall economy.

Consumers are exposed to extreme effects of taxes, and may even be effected more than any other group within the economy. Increasing prices on their products due to the increased taxes makes up most of the potential profits for businesses. The consumers therefore lose out because of the increased prices, and must decide on another budgetary analysis. For example, a consumer who is introduced to new taxes may decide to stop purchasing a certain product. A consumer may choose to not purchase a good that my normally go along with another good. This good is a complimentary good and may n

Businesses also are exposed to many different effects in reaction to the increase in taxes. For instance, the taxes cause businesses to increase the costs of goods that consumers buy. The tax increases encompass a great span of the nation, and can effect every aspect of the business. Taxes that are collected from businesses that effect the cost of the goods and services within businesses include: property taxes on all business property (furniture, machinery, inventory, real estate), sales taxes on goods and services that businesses purchase (utilities, property, inventory, real estate), gross receipts tax businesses pay to local governments, state and federal income tax on business profits. These taxes effect every aspect of the business, and can trickle down to every productive sector of the business. Other costs to individuals and businesses, due to an overly complicated tax system, is the cost of keeping track of, accounting for, and filing of all tax information. This aspect of taxes causes businesses to provide more funding for financial departments. Even when a company does not produce as much due to the taxes, the company must still spend more money in order to control their finances fully due to the dramatic increase. Not to mention the costs that the government has to spend to police the tax codes. There are also many other negative effects that taxes have on growth, productivity, and freedom. Businesses refrain from buying equipment as much as possible. The turnover on certain items such as a new computer network is low due to the increased price with the increase of taxes. The businesses thus must continue working within a stifling work environment because of the lack of innovative resources. Businesses also refrain from selling assets as much as possible. These assets cost more money to produce and also to maintain, and is not as beneficial to the business as it was before the increase in taxes. This can be seen in a company's inventory. A company may decide to purchase less of an inventory because of the lack of controlling of costs for that inventory. The businesses purchase less, and the suppliers of the inventory end up selling less. It makes a domino effect, which effects every aspect of production and business. Businesses refrain from hiring extra help as much as possible, and many time people refrain from working more. The businesses cannot afford as much labor within the

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Approximate Pages = 7 (250 words per page double spaced)

Category: Politics