Nov 20, 2020 10:27 PM EST
The Importance of Paying Your Taxes
Starting your first job is a crowning moment. The excitement of receiving your first paycheck overshadows the stress of the interviews and first-day nerves. Your payslip tells the story of your worth, but there's a hitch. Tax has been deducted. What is this, and why do you pay it? There's a relatively simple explanation.
Why Do We Pay Tax?
Have you ever wondered where the government gets its money? There always seems to be infrastructure development, maintenance on transport systems, and other government-funded projects underway. Yet, you don't think twice or look for more detail about where funding for these ventures comes from.
Governments around the world impose taxes on their citizens and businesses to generate revenue. Without this money, countries would plunge into debt, and society would suffer. It's taxpayers' money that makes up a large part of the annual budget. This money keeps the country's cogs turning, and helps society in many ways, including the following:
Education is crucial to the longevity of the country's success. Without investing in the growth of young minds, the government is limiting the continued strength of the population. Your tax money goes towards infrastructure, furnishings, and maintenance of the education system.
Government funding for the health sector comes from taxpayers' revenue. This funding goes towards vital services like social healthcare, medical research, and social security. If the government provided no funding, costs to the population would increase beyond what many could afford.
Local, State, and National Governments
Government employees at all levels - state, local, and national - are paid from the funds collected through taxation. Without these employees ensuring effective management of their sectors, the country would flounder. This would have far-reaching effects on the population.
Other Important Sectors
Everything that the government has a hand in requires funds, much of which comes from the taxpayer. Security, welfare and benefits, environmental protection, research, and job creation are among the many other areas in which the government invests heavily.
Do We Have to Pay Taxes?
The short answer is yes. In addition to paying tax on your income, there are other unavoidable amounts. The sales price of items in stores incorporates sales tax, and you pay property tax on the value of your house.
Although income tax is variable and calculated based on your earnings, sales tax doesn't differentiate between those workers with a high income or a low income. Everyone pays the same amount on an item.
Businesses must also declare any income generated during a tax year and pay the applicable federal or income tax amount to the Internal Revenue Service.
What Happens If I Don't Pay My Tax?
The law requires that you pay tax on any income that you've earned during the year. Not doing so is a punishable offense and could result in a fine, or in severe situations, jail time. Over the years, people and businesses have come up with some innovative ways to cheat the taxman.
One of the better-known business-related cases of tax fraud involved the use of a "Zapper." This software suppressed sales when used together with a restaurant's point of sale software.
The restaurant's books reflected lower than actual income, resulting in underpaid federal, state, and local taxes. More detail about these investigations are available on the internet and make for interesting reading.
Whether you have a part-time or casual job or are employed in full-time work, you'll pay some form of tax. These are vital to the smooth running of the country. It's your responsibility to ensure that you're honest and upfront about declaring your income, or the repercussions may be greater than the tax due.
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