Participation in Government Discussion Question 11
Taxation is a contribution to government, a source of revenue for government, and a form of public policy not only for collecting revenue but also for regulating behavior. Paying taxes is both a civic contribution and a legal obligation. Paying taxes is a civic contribution in the sense that all governments rely on taxation of the people (income, property, and sales) as a major source of revenue. As a legal obligation, paying taxes is required by law and failure to pay is subject to penalties imposed by the law. Students should also be able to see this constitutional system of taxation as a reflection of federalism and representative democracy. Students should understand that taxation can also be an instrument of public policy that has the intent or effect of regulating behavior. Many tax policies contain financial incentives for certain kinds of behavior (like buying a home) and disincentives against other kinds of behavior (like spending retirement savings before retirement age). Taxes are considered to be “regressive” if they impose a higher tax on people with lower income. A regressive tax exacts a lower proportion of income from higher-income families than it does from lower income families. The retail sales tax is a good example. Conversely, a “progressive” income tax is one in which the rate of taxation increases as individual income increases. And tax relief can be offered to certain categories of people to reduce their tax burden (e.g., municipal reduction of property taxes in the form of rate exemptions for senior citizens, those in military service, or veterans with a service-connected disability).
Discussion Question #11 - What are the civic implications of taxation?