HOW TAXES AFFECT AN INDIVIDUAL`S BEHAVIOR
Taxation refers to the act of levying tax on an activity, income, or product. Imposed by the government, it is applicable to all types of taxes, including gift and estate taxes. The primary objective of taxation is to fund government expenditure. Without it, no road expansion or repairs, social projects, or education will be financed.
Although it has certain benefits, governments have been using taxation to influence the behavior of its constituents. But where does the line draw between personal freedom and the society’s benefit?
In 2010, restaurants in New York were rattled by a proposal to ban salt. New York Assemblyman Felix Ortiz introduced Assembly Bill A10129 that would prohibit chefs from using salt as an additive in any recipe. The assembly member stipulated that was a huge step in helping to save lives lost to heart disease. Under the bill, chefs would be fined $1,000 for every violation. However, a coalition of chefs, restaurant owners, and consumers called "My Food My Choice" denounced the proposal and described it as absurd. Even former New York City Michael Bloomberg considered the plan ridiculous.
This is not the first time salt consumption has been scrutinized. France was one of the key territories that imposed salt taxes. Called gabelle, the tax was initially applied on the sale of consumer goods before the 1879 revolution. But in the 15th century, it specifically referred to a tax on the consumption of salt. Even India used this tax to mount nonviolent rallies against the government. However, the medical industry remains split on barring salts. Although excessive salt can cause major cardiac issues, having little or no salt diets can have the same reaction in a huge section of the population.
Still in New York, former NY Governor David Paterson laid out his proposed carbonated beverage tax. He was hoping it would improve New Yorkers’ diets and sanction companies that would manufacture unhealthy goods. Under the proposal, the tax soda would place a 18% charge. Analysts estimated consuming these drinks could be reduced by 15% within one year. If passed, it would lessen and generate more than $400 million a year for health-related programs.
Paterson had worked on reinforcing the dangers of sugared beverages amidst debate on this matter. But like the salt tax, this "Obesity Tax" failed.
But not all taxes are implemented to make life complicated and stop a person from living an unhealthy lifestyle. Another behavior modification came in the form of child tax deductions. By alleviating the monetary impact of parenthood, parents would be encouraged to have kids hoping they would eventually help sustain the economy. This tax credit is based on the number of children in a household.
In 2015, the maximum amount for child & dependent care credit is $3,000. Marital status and salary limits also play a vital role in this credit. The allowable tax credits are determined according to an individual’s tax-filing status.
Have you heard the Trickle-Down Taxation? When former US President Ronald Reagan initiated again supply side or trickle-down economics, he was hoping a decline in marginal tax rates would encourage individuals or entities in higher tax brackets to put their money in business foundations, as well as high-risk, high-yield investments in order to create jobs and lower corporate debt. But the program was hugely disputed, which had widen the political, financial, and economic gap between the upper, middle, and lower classes because Medicare and Social Security taxes were raised. During Reagan’s term and following the 1982 recession, the unemployment rate dropped from 9.7% to 5.3%
Basically, there are two taxation approaches: subtlely and with an iron fist. Normally, citizens find the first approach more convenient so the numbers slowly increase, as well as to avoid panic and revolt. These are the usual effects of taxation in a person’s behavior and the country – which are way subtle than the approach of Jean-Baptiste Colbert, the Controller General of Finances to King Louis XIV. He was best known for punishing – and killing – tax evaders.
Reverse Mortgage as Retirement Tool
Choose Your Career Wisely: Investment Banking vs. Management Consulting
Downside of Investing in ETFs
Considerations When Buying a Mutual Fund
Process of Making A New Financial Product
Supply and Demand in Economics
POPULAR FOREX DEFINITION
|Rightmove House Prices
|Bundesbank Monthly Report
|Industrial Product Price Index
|Raw Materials Price Index
|Monetary Policy Meeting Minutes
|Current Account (sa)
|BOE Deputy Governor for Monetary Policy Ben Broadbent Speaks
|Consumer Price Index