How do different types of taxes affect the government and taxpayers?

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No one likes taxes. US citizens waste more than 7.6 billion hours complying with federal tax requirements.  U.S. Supreme Court Justice Oliver Wendell Holmes once said, “Taxes are the price we pay for a civilized society.” In the article, Economics of Taxation, it talks about three major taxes in the US that each affect the government and taxpayers differently. These taxes are the sales tax, income tax, and estate tax.

First, a sales tax is tax paid to the government for the purchase of certain goods or services. Sales taxes are an important source of revenue for most states and some large cities and counties. However, the amount people are taxed, and the item that is taxed varies in each state. Similar to the sales tax there are also taxes called luxury taxes which tax people on specific items chosen at a federal and state level.  Examples of items subject to these taxes are heavy tires, fishing equipment, airplane tickets, gasoline, beer and liquor, firearms, and cigarettes. The goal of the luxury tax is to place the burden of paying the tax on the consumer. This hopefully will encourage people to use less of harmful items, like alcohol and tobacco. Another good reason for this tax, for example is the tax on gasoline. This tax is meant to pay for highways and roads by taxing those who use them the most, and purchase the most gasoline.

Another type of tax is the income tax. The earnings of both individuals and businesses are subject to income taxes. Most of the Federal Government's revenue comes from income taxes.  Workers also pay into the social security program with money coming from their paychecks. Recently, the amount paid to social security has greatly increased. This is because there are fewer workers paying for each retired person now receiving benefits. Some state governments also use income taxes to pay for the state's unemployment compensation programs.

The last type of tax is the property or estate tax. The property tax is local government's main source of revenue. Most local governments tax private land based on the value. Some state and local governments also impose taxes on the value of certain types of personal property. This includes cars, boats, recreational vehicles, and livestock.

Future research question: How can developing countries help environment?