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Showing posts with label Indian Taxes. Show all posts
Showing posts with label Indian Taxes. Show all posts
Thursday, February 2, 2012
Importance of taxes: Why should we pay tax to the government
All citizens of a country are morally and legally bound to pay their fair share of tax. In this article I will cover the importance of paying taxes to the government and why we should not do the mistake of hiding money or avoiding taxes. A large percentage of people who pay tax think as if government is trying to steal their hard earned money .. well thats not true. Money collected from taxes help a country to become stronger and help government provide a variety of services to its citizens.
Example of some services that government provides with our tax money:
1. Infrastructure Projects: Government needs money to build roads, bridges, dams and number of other projects which are available to the society as a whole.
2. Public Security: Money collected from taxes is used to provide police and fire departments. It also helps to fund money needed to maintain defense forces (army, navy and air-force) and buy arms for them.
3. General services: Keeping roads clean, water treatment, street lights, trash removal and maintenance of public parks requires lot of money.
4. Health Services: Almost all governments provide some level of free or subsidized health services to its citizens. This may include preventive immunization shots, disaster relief and many others. All this money is funded by the tax money you and I pay.
5. The list goes on: Maintenance of historic monuments, government aid, emergency relief, conduct elections, run several government institutions like department for agriculture, commerce, energy, urban development, treasury, judiciary, department of motor vehicles etc.
Types of taxes:
Government can impose taxes in many forms, for example: Income tax, Sales tax, Excise tax, Toll Tax, Recreation tax, social security, medicare etc ..
Does everyone has to pay tax?
It depends on country to country, but in most cases people with very low income do not have to pay tax.
Does everyone pay same tax?
Usually people with higher income pay a higher percentage of tax than the people with lower income.
Why should I still have to pay tax?
Think about this, if we only paid for the services we need then there is no way we could afford it. For example if you wanted to go from City A to City B, can you afford to pay for the construction of road that connects those two cities.. NO. You open tap and clean water flows out of it, if we were to put a filtration system on our own and a pipe that connects all the way to the nearby reservoir, it will cost just too much. Therefore we pay for these services in form of tax and use them as a whole society.
The result of not paying taxes could result in penalty and prison time. So next time when the time comes to pay taxes, do not feel too bad. It is your contribution to the services you receive in return.
THIS ARTICLE IS IDEALLY FOR A PERFECT SYSTEM, but IN INDIA, WHY SHOULD WE PAY? THERE ARE NO FACILITIES FOR THE CITIZEN.
Example of some services that government provides with our tax money:
1. Infrastructure Projects: Government needs money to build roads, bridges, dams and number of other projects which are available to the society as a whole.
2. Public Security: Money collected from taxes is used to provide police and fire departments. It also helps to fund money needed to maintain defense forces (army, navy and air-force) and buy arms for them.
3. General services: Keeping roads clean, water treatment, street lights, trash removal and maintenance of public parks requires lot of money.
4. Health Services: Almost all governments provide some level of free or subsidized health services to its citizens. This may include preventive immunization shots, disaster relief and many others. All this money is funded by the tax money you and I pay.
5. The list goes on: Maintenance of historic monuments, government aid, emergency relief, conduct elections, run several government institutions like department for agriculture, commerce, energy, urban development, treasury, judiciary, department of motor vehicles etc.
Types of taxes:
Government can impose taxes in many forms, for example: Income tax, Sales tax, Excise tax, Toll Tax, Recreation tax, social security, medicare etc ..
Does everyone has to pay tax?
It depends on country to country, but in most cases people with very low income do not have to pay tax.
Does everyone pay same tax?
Usually people with higher income pay a higher percentage of tax than the people with lower income.
Why should I still have to pay tax?
Think about this, if we only paid for the services we need then there is no way we could afford it. For example if you wanted to go from City A to City B, can you afford to pay for the construction of road that connects those two cities.. NO. You open tap and clean water flows out of it, if we were to put a filtration system on our own and a pipe that connects all the way to the nearby reservoir, it will cost just too much. Therefore we pay for these services in form of tax and use them as a whole society.
The result of not paying taxes could result in penalty and prison time. So next time when the time comes to pay taxes, do not feel too bad. It is your contribution to the services you receive in return.
THIS ARTICLE IS IDEALLY FOR A PERFECT SYSTEM, but IN INDIA, WHY SHOULD WE PAY? THERE ARE NO FACILITIES FOR THE CITIZEN.
Why Should We Pay Income Tax?
Having to pay income tax makes me feel sick… really sick. It gives me a feeling that we are staying in a socialist economy. I can understand why we should pay property tax or why we should pay water tax or road tax (though I feel it is unjust to pay road tax as we also pay the toll… anyway). But income tax? what for? What service or facility am I using from the government for which my income is taxed, and that too heavily. Man!
The people who earn more are taxed more. This results in a sad situation for a person who is just above the taxing bracket. Because he ends up earning less than the person who earns just below the taxing bracket. Indirectly this means the person who is relatively poor is brought on the level terms or some times higher than the person who is relatively rich, or should I say relatively less poor? It gives me a feeling that it is a way to restore economic parity in the society. Does it not sound like a socialist ploy?
Another two idiotic taxes I hate are the VAT and the service tax. Last time I went to Pizzahut to have a pizza, I shelled out 25% more money than the list price. They bloody charged me both VAT and service tax. I was like, WTF man! The cost of the service Pizzahut provides is built in the price of their Pizza. And they are paying the stupid income tax on what they earn by selling Pizzas anyway. Then why tax the service? Is it not double taxation? And what about VAT?
Taxation is increasing the prices of commodities by as high as 30-40% in some cases. So we are shelling out more money to satisfy the same needs. I heard a debate on a news channel on rising inflation and no one talked about taxation. Dont you think taxation is contributing to the inflation as well?
What Percent of Earnings Is Spent on Taxes?
Social Security and Medicare
- Anyone who earns money pays Social Security tax and Medicare. If you work for another person, you pay half and your employer pays half. Those who are self-employed pay the entire amount. For every $100 you make, your employer withholds $6.20 -- up to $106,800 in earnings in 2010 -- for Social Security and $1.45 for Medicare tax. Your employer has to pay the same amount on your behalf. Self-employed individuals have to pay twice that amount because they're both employee and employer. In 2011, the employee rate for Social Security drops for one year by $2 per $100.
Federal Tax
- With federal taxation, the Internal Revenue Service brackets the percentage you pay. That means you pay a specific amount of tax on a set dollar amount, but as your income increases, the tax percentage increases on the amounts you earn above that number. Single people pay 10 percent on earnings of $8,375 and below and 15 percent on earnings above that. The percentage increases until it reaches 35 percent on income over $373,650. The breaks where the percentage increases vary by your tax filing status. You pay tax on all income, including investment income, gambling winnings and pensions.Exemptions and Deductions
- When you calculate your taxes, you reduce your income by your exemptions and deductions. The people you support for more than half the year can qualify as exemptions worth a $3,650 deduction each -- and in some cases the deduction is larger if you're older than 65 or blind. Deductions are expenditures that reduce your taxable income. They can be a flat amount based on your filing status, or you can itemize them if you have more deductions than the average person does.
State Tax and Local Tax
- Most states use the federal adjusted gross income -- income before the exemptions and deductions -- to calculate the state tax. Some states have no state income tax, such as Nevada. Some states tier the tax percentages like the federal tax system does, with the highest rate over 10 percent. Other states, such as Indiana, have a flat rate. The percentage you pay varies by the state in which you live. In some cases, you also pay local income tax for your city or county.
Sales Tax
- If you purchase anything during the year, you'll pay sales tax in most cases. Some states don't charge sales tax on food or prescription drugs. California has the highest sales tax at 8.25 percent. Several states have no sales tax.
Other Taxes
- If you purchase a gallon of gasoline, the actual cost of the gas is much lower than what you pay. The rest is tax. You then pay sales tax on the total amount, which means you're paying tax on tax. If you own a home, you pay property taxes. If you stay at a hotel, there's a hotel tax tagged on to the bill. If you use a phone or pay for utilities, those services are also taxed. You pay a tax every year when you update your vehicle's registration. Almost every time you purchase an item, the manufacturer and retailer include the cost of the tax.
Read more: What Percent of Earnings Is Spent on Taxes? | eHow.com http://www.ehow.com/info_8196810_percent-earnings-spent-taxes.html#ixzz1lIAxDPqh
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