Every government dreams of increasing the revenue accrued from taxation every year with a large percentage as much as It can. The authorities work day and night to establish fraud free taxation system as a way of tightening the rules that regard tax collection. This has become even more important since the inception of online tax returns This ensures that the revenue of the government remains at an estimated figure that can be used to set targets for the expected projections. How does tax avoidance beat the government in its own game?
Avoidance of tax refers to taking a legal advantage to reduce the amount of tax that is payable to the government. This is a personal wish of a person to keep their money as oppose to paying the government taxes.
This is achieved by reducing the transactions that are likely to be taxed. The other recognize methods are refunds of the taxes, credits, benefits and entitlements. Arrangements where a person decides to separate his/her property to two different entities there is a legal separation of rights and incase he donates property to self as a gift this creates a perfect case scenario of tax avoidance.
People who travel also present a good chance of tax avoidance sine tax is charged on the income that is earned inside the country where the person works. Avoiding double taxes is as well legal where bilateral tax agreement exists between two different countries.
The implication of tax avoidance in general is reduction in the amount of the revenue that the government earns on taxation of the people who avoid this taxes. Though tax avoidance is legal government takes measures to minimize it to keep it tax revenue high.
weather you use the computer to file your tax return online or you use a CPS, avoiding taxes not only harm the country revenue wise but also weakens the taxation system that is established In a given country since it provides loop holes that weaken the tax structure of the government in question.
Taxes are not uniform allover the world, for instance not everyone has the luxury of filing state tax returns online or receiving a efile tax refund. inform of the way of execution, magnitude of the taxes or types of taxes. Taxes remain a variable indifferent region, countries and zones due to the imbalance in the economic power for you can only give what you can afford!
The prevailing economic situation in each country dictates the way the taxation is executed. The taxation structure in a given country is a perfect reflection of the economy of that country. The strong nations economically are a product of good taxation system.
The government system i.e. capitalist economy, socialist economy or mixed economy is also a subject to influence of the kind of taxation adapted by each country. The set down parameters that regulate the way taxation is carried out consider a number of factors the type of taxes levied on the individuals and corporate include salary or income tax, property tax, profits tax, profession tax, capital tax is a key determinant of the tax amount and the period of payment.
There arises situations where some taxes are not to be paid legally for a number of reasons. In such case the term tax exemption is used to describe this scenario. Exemptions are claimable legally if the government in question recognizes the exemptions.
The running of the local authorities demands that the local governments tax the inhabitants of the region for effective provision of the local government services such as drainage and sewerage utilities and local road maintenance.
The major problem that comes with taxes across the divide is the tax burden this is curbed by increasing the tax base or platform by increasing the number of people being taxed and this significantly reduces the amount taxed per individual.
The reasons behind taxation are varied, the principles of taxation applies to every one regardless of how much money they earn, their educational background, skills or the amount of wealth an individual has. This happens in ideal societies where all the citizens uphold the rule of law and obey the authority. When people understand the reason of taxation the world would be probably be a better place for the reasons discussed here.
Some people like to file their 1040 online, but the reason of taxation is to pull financial resources in one common pool. From this common point the distribution of the resources by the authority is executed depending on the laid down procedure that vary from one country to another country. It would be impractical for any authority anywhere in the world to run its activities in the absence of taxation. To put more emphasis on this we can simply sum it in a few words Taxation is the engine of all the governments in the world!
If you think you are spending too much on taxation , it is time you realized that without taxation the peace and stability you enjoy as a citizen to any government in the world would be too expensive than your current tax bill. It is important that even the children in their early life realize that taxes are inevitable and they are for the common good of the society unlike the defaming myths of taxes. Responsible citizens pay their taxes and they as well court patriotic principles in their children amongst them respect to authority.
It doesn’t matter how you file weather you do you tax returns online or through a tax professional.Taxes are either direct taxes or indirect taxes and the more specific taxes include income tax, wealth tax, gift tax, expenditure tax and interest tax. It is important for people to understand than more employment is created when people pay tax as well as improved government services and infrastructure are the long term accrued benefits of payment of taxes.
It is time that we all embraced taxes since It is a way of improving our livelihood.