Something that people don’t always consider when discussing taxes is the effect of taxes on people’s behavior. Specifically, certain items in the tax code are put there to discourage or encourage behavior based on what the government considers to be “laudable behavior” For example; interest on mortgages is deductible, while rent is not. This stems from the premise that owning a home is preferable to renting, as it creates a more stable society, and engenders a greater sense of community.
Another item is charitable contributions, which are deductible for most people. This also stems from the sense of community, but also from a sense that as charities do more good in a community, this takes a burden off of the government. On to the question at hand Raising Taxes: Pro: It enables the government to ensure that services to citizens are available, and necessary expenditures on infrastructure (roads, etc) are met without the need for excessive bond issuance.
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Con: It lowers the disposable income of citizens, and lowers the consumer expenditures of the general populace, which hurts businesses and the overall economy. – This is particularly true in the case of so-called “luxury” goods, such as high-priced cars, jewelry, and other such goods. Con: It encourages excessive spending on the part of the governmental entity due to a “need” to spend money. Governments rarely spend less than they take in, and quite often spend more than they take in.
As the pie gets bigger, there is no indication that the government will not spend it all. Lowering Taxes: Pro: Increases disposable income of citizens and enables economic growth. Another side-effect is it limits government waste by requiring government spending to be justified against other possible government expenditures (Government has a tighter budget). Con: Possible lack of public services, particularly for unpopular services, such as prisons and welfare activities. Another poster mentioned the feeding and clothing of prisoners as unpopular government expenditure.
Con: Big Spender Effect – The government, due to its immense size, is more palpable of taking on projects that individuals and corporations could not easily afford, namely road construction, most school systems, and other projects. As the tax rolls decrease, the ability to accomplish these projects is diminished. As you can see, raising and lowering taxes both have their ups and downs. As a nation we must not turn against our government, but stand and support them. I believe that taxes overall help our country and is a great nation because of our support financially.