taxes

 Ok, it's 12-30-2004 and I am finally transcribing the Awake! magazine.

On page 3 it has an article titled:

Growing Resentment Against Taxes?

"If i toil it is snatched away from me."
- Babylonian proverb, about 2300 B.C.E.

"In this world, nothing is certain but death and taxes."
- U.S. statesmen Benjamin Franklin, 1789

     Reuben works in sales. Every year nearly a third of his hard-earned wages evaporate in the form of taxes. "I don't see where all this money is going," he complains. "With so many government cutbacks, we're receiving less services than ever before."
     Like it or not, though, taxes are a part of life. Writer Charles Adams says: "Governments have been taxing income in many ways as long as there has been civilized life." Taxes have often aroused resentment and have sometimes sparked revolt. The ancient Britons fought the Romans, saying: "How much better to have been slain than to go about with a tax on your heads!" In France hatred of the gabelle, a salt tax, helped spark the French Revolution, during which tax collectors were guillotined. Tax revolts also played a role in the U.S. war of independence, fought against England.
     Not surprisingly, resentment against taxes continues to smolder to this day. Experts say that in developing lands tax systesms are often "inefficient" and "unfair." According to one researcher, there is an impoverished African land that had "over 300 local taxes, the administration of which was impossible even with the best of capacities. Proper collection and monitoring mechanisms are eiter non-existant or not applied,...creating opportunities for misuse." BBC News reported that in one Asian land, "local officials imposed dozens of...illegal charges - from fees for growing bananas to taxes on slaughtering pigs - either to top up [increase] the local finances or to pad their own pockets."
     The gap between the rich and the poor fuels the fires of resentment. Says the UN publication Africa Recovery: "One of the many economic differences between developed and developing countries is that developed countries subsidize farmers while developing countries tax farmers...World Bank studies suggest that US subsidies alone reduce West Africa's annual revenue from cotton exports by $250 [million] a year." Farmers in developing lands may thus resent it when their government extracts taxes from their already meager earnings. A farmer in one Asian lands says: "Whenever [government officials] came here they were bound to be asking for money."
     Similar resentment was seen recently in South Africa when the government imposed a land tax on farmers. The farmers threatened court action. The tax "will cause bankruptcies among farmers and further unemployment among farmworkers," charged a spokesman for the farmers. At times, resentment against taxation still results in violence. Reports BBC News: "Two [Asian] farmers were killed last year when police stormed a village where peasants were protesting against excessive taxes."
     It is not only the poor who resent paying taxes, though. A survey in South Africa revealed that many affluent taxpayers "are not willing to pay additional taxes - even is this meant that the government would not be able to improve services that are important to them." World-renowned celebrities in the fields of music, film, sports, and politics have made headlines because of tax evasion. The bookThe Decline (and Fall?) of the Income Tax observes: "Sadly, our highest government officials, our presidents, have also been far from perfect role models in inspiring ordinary citizens to obey the tax law."
     Perhaps you likewise feel that taxes are excessive, unfair, and overwhelming. How, then, should you view that paying of taxes? Do they serve any real purpose? Why are tax systems often to complex and seemingly unfair? The following articles explore these questions.

    Article on Page 5, "Taxes, Price of a Civilized Society?

    "Taxes are what we pay for a civilized society."
    - Inscription on the Internal Revenue Service building, Washington, D.C.

     Governments argue that taxes are a necessary evil - the price of a "civilized society." Whether you agree with that sentiment or not, it is undeniable that the price is usually a high one.
     Taxes can be divided into two categories: direct and indirect. Income tax, corporate tax, and property tax are examples of direct taxes. Of these, income tax is probably the most resented. This is especially so in lands where income tax is progressive - the more you earn, the more you pay. Critics argue that progressive taxes punish hard work and success.
     The OECD Observer, a publication of the Organization for Economic Cooperation and Development, reminds us that in addition to taxes paid to central governments, "income earners may have to pay local, regional, provincial or state income taxes on top of these central government income tax. This is the case in Belgium, Canada, Iceland, Japan, Korea, the Nordic countries, Spain, Switzerland and the United States.
     Indirect Taxes include sales taxes, taxes on liquor and cigarettes, and customs duties. There are less visible than direct taxes but can still pack an economic punch, especially among the poor. In India's Frontline, writer Jayali Ghosh argues that it is a myth that middle-class and wealthy taxpayers pay the bulk of India's tax bill. Ghosh says: "For the State governments, indirect taxes amount to more than 95 per cent of their total tax collection...It is likely that poorer people actually pay out a larger share of their income in the form of taxes, than the rich." High taxes on items for mass cumsumption, such as soap and food, evidently create this disparity.
     Just what do governments do with all the money they collect?

Where the Money Goes

     Admittedly, it costs governments massive amounts of money to operate and provide necessary services. In France, for instance, 1 person in 4 works in the public sector. This includes teachers, postal workers, museum and hospital personnel, the police, and other government workers. Taxes are needed to pay their salaries. Taxes also provide roads, schools, and hospitals and help pay the bill for such services as garbage collection and postal delivery.
     The demands of the military are another force driving taxation. Income tax was first levied on wealthy Britons to finance the war against the French in 1799. During World War II, however, the British government began requiring the working class to pay its share of income taxes. Today, oiling a nation's military machine continues to be a costly affair, even in times of peace. The Stockholm International Peace Research Institute estimated world military expenditure in 2000 to be approximately 798 billion dollars.

Social Engineering

     Taxes also serve as a means of "social engineering" - a tool to encourage or discourage certain forms of behavior. Taxing alcohol, for example, supposedly curbs excessive drinking(Note from Victor. I think our greedy government taxes alcohol just because people get hooked on it and will pay whatever price for it. Then they turn around and get in their expensive cars, err, death machines, because they're in such a hurry, just like the governments wants them to be, and go out and kill innocent people. All for money.) Thus, in many lands taxes up about 35 percent of the retail of the cost of beer.
     Heavy taxes are also levied on tobacco. In South Africa taxes make up from 45 to 50 percent of the cost of a pack of cigarettes. However, a government's motive in promoting such taxes may not always be purely altruistic. As writer Kenneth Warner observes in the magazine Foreign Policy, tobacco is "a powerful economic force that annualy generates hundreds of billions of dollars in sales and billions more in tax revnues.
     On notable example of social engineering took place early in the 20th century. U.S. lawmakers sought to curtail the formation of wealthy family dynasties. How? By creating an estate tax. When a rich man dies, taxes take a huge bite out of his accumulated wealth. Proponents argue that the tax "diverts resources out of the familial, aristocratic channels into civic, democratic ones." Perhaps, but wealthy taxpayers have developed numerous strategies to soften the blow of that tax.
     Taxes continue to be used to promote various social issues, such as the environment. Reports The Environmental Magazine: "Nine Western European countries have implemented environmental tax shifts recently, mostly as a means to recuce air pollutants." Progressive income taxes, mentioned earlier, are yet another attempt at social engineering; the idea is to reduce the gap between the rich and the poor. Some governments also give tax relief to those making charitable donations to couples who have children.

Why So Complicated?

     Whenever a new tax is proposed, legislators try to close any possible tax loopholes. Remember: Enormous amounts of money are at stake. The result? Tax laws tend to be complex and highly technical. An article in Time magainze explains that many of the complications in U.S. tax law "come in defining income," that is, in determining just what is taxable. Further complications come from the myriad rules "allowing various deductions and exemptions." It is not just the United States that has complicated tax laws, however. A recent edition of the United Kingdom's tax legislation ran to 9,251 pages, filling ten volumes.
     The Office of Tax Policy Research at the University of Michigan reports: "Each year U.S. taxpayers spend over three billion hours on their income tax returns...All together, the time and money spent by U.S. income taxpayers [in filling out tax returns] amounts to as much as $100 billion every year, or about 10% of the tax collected. Much of this compliance cost is due to the mind-boggling complexity of the income tax law." Says Reuben, mentioned at the beginning of the first article in this series: "I used to try to do my own taxes, but it was time-consuming, and I often felt I was paying more than I had to. So now I pay an accountant to do my taxes."

Payers, Avoiders, and Evaders

     Most people will at least begrudgingly acknowledge the benefits that taxes bring to their community. The head of the British Inland Revenue once explained: "Nobody enjoys paying income tax, but few people argue that we would be better off without it." Some estimate that the level of tax compliance in the United States is as high as 90 percent. One tax authority admits: "Much non-compliance stems from difficulty with the law and procedures, rather than from willful evasion.
     Even so, many find ways to avoid paying certain taxes. For instance, consider what an article in U.S. News & World Report said about corporate taxes: "Many firms legally skirt a large share of their liability - and sometimes all of it - through tax breaks and accounting manuevers." Giving an example of one clever scheme, the article continues: "A U.S. corporation sets up a firm in a foreign tax haven. It then turns the U.S. operation into a subsidiary of the foreign company."