Taxation

Taxation

Benjamin Franklin once stated that in this world , all things are not definite except for two things : death and taxes . All citizens organizations and corporations are required to taxes , and most of the people hate it . What is taxation anyway ? Why do many people and private sectors avoid it

Taxation , the main income of the government , is the compulsory charge against a person or private sector to finance the expenditures of the government for its projects for the benefit of the citizens and development of its country . There are two

kinds of taxation : direct and indirect . In direct taxation , it is levied upon the wages , revenues or assets of a person (e .g . real estate and houses , on the other hand , a surcharge on the prices in the market is called indirect taxation (e .g Value Added Tax . Taxation effects reflect both in the producers and consumers especially in indirect taxation . When there is an increase in the tax collected from corporations or companies , of course they have to gain back the money through the consumers , there will also an increase in the price of the products or services offered . Many people hate paying taxes because they think instead of giving it to the government they could have used that for their own family . Also , increase in taxes leads to inflation . The tax collected from the workers increases and at the same time the goods in the market becomes more expensive . Producers often recover about half of the tax from consumers because of price hike

Supply and demand is one of the most essential concepts in economics that almost all elements are connected to them . Demand represents the amount of products or service is desired by the consumers . How many consumers are willing to pay a certain price for a certain good or service offered ? The supply refers to the amount of product that the market can produce . How many goods are the producers can supply after receiving a certain price ?Price is the reflection of supply and demand The law of demand states that the price is inversely proportional to the demand for the product , if the price gets high the demand will for the product will decease . In contrast , the law of the supply states that the higher the price the higher the supplies

For example , a certain good has a limited stock , but many people is needed the product . With the law of the deman , it follows that the price will greatly increase from its original price . But if there is more supply , the price of the goods will be lower than what is supposedly price of the product even if the demand is very high , according to the law of supply

How does the tax affect the supply and demand ? Any tax modifies the supply and demand for product , labor and capital . Inflation comes after an increase in taxation . Many goods in the market will also increase their prices . As a result , the demand...