Tax Assessment And Its Effects On Today s Taxation Policy...

Tax assessment has always been a hotly debated issue in economic. We all know that it costs a lot to run a household. In the same sense, it costs a lot of money for a government to run a country. This is why taxation is necessary. Through taxation, a government can compensate their spending and fund the social services that benefit most of the society. High tax can compensate the government spending while may curb investment. A question always being raised is that how to impose an appropriate and efficient tax without harming our economy and what subjects are best to be taxed. We can find the answer from the analyses on different approaches to taxation by Adam Smith and David Ricardo throwback a century ago. Their analyses still have a far-reaching impact on today’s taxation policy. Adam Smith discusses different strategies for levying a tax in his book â€Å"Wealth of Nations†. Smith calls attention to that the state can raise money through five different channels: tax es on the rent of land, taxes upon the rent of the house, taxes upon profit, taxes upon the wages of labour and taxes upon consumable commodities. One way for Smith to evaluate those five different taxation channels is that whether they satisfy the four basic maxims for taxation he made. For a tax to be considered good and efficient, it needs to meet the following four basic principles raised by Smith: â€Å"I. The subjects of every state outhg to contribute towards the support of the government, asShow MoreRelatedFederal And State Taxes Into A Single Tax Essay1353 Words   |  6 Pages6. Amalgamating several central and state taxes into a single tax would help mitigate the double taxation, leading to a common national market. From the consumer’s point of view, the advantage would be in terms of a reduction in the overall tax burden on the goods, which is currently estimated at 25% to 30%. 7. 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