Why Do We Pay Taxes?

Taxes are a necessary part of our society, but do you ever stop to wonder why? In this article, we'll take a look at the history of taxes and how they've evolved over time.

We all know that we have to pay taxes, but do you ever stop to wonder why? Taxes are a necessary part of our society, and they help to fund many important programs and services. In this article, we’ll take a look at the history of taxes and how they’ve evolved over time, as well as talk about what your taxes actually pay for.

The History of US Taxes

The concept of taxation dates back to medieval Europe and has been an important part of government funding ever since. In the United States, taxes were first implemented by Congress to help fund our revolutionary war. Since then, many different types of taxes have been developed and imposed on individuals, businesses, and other entities to generate revenue for various projects and services.

Ancient Egypt & The Property Tax

One tax that we all know has been around for centuries: is property tax. This type of tax has been seen in Ancient Egypt, where it was used to support temples and help build monuments. To collect taxes, the Egyptians would use a system of tax collectors or “scribes” to go around and assess the value of property owned by individuals. This type of taxation could also be seen in other ancient civilizations such as China, Mesopotamia, and Greece.

Modern Taxation

Today, taxation is much more complex. Governments everywhere collect taxes on income, investment, sales, imports and exports. In some countries, taxes are collected from businesses and individuals on a progressive basis – meaning that the higher your income or wealth is, the more tax you pay as a percentage of your earnings. Tax rates can also differ according to specific activities such as trade or providing services.

US Taxes: Where It All Started

The first form of taxation in the United States was the Whiskey Tax, which was first imposed in 1791. This tax was a flat-rate excise tax on whiskey production and was put in place to help pay for our Revolutionary War debt. Not long after that, the tobacco tax was enacted in 1794, followed by taxes on property, products, and transactions in 1813, which helped fund the War of 1812.

Civil War & Federal Income Taxes

From there, individual income taxes became widespread to fund the Civil War and were later implemented on an even larger scale in 1913 with the passage of the Sixteenth Amendment, which gave Congress the authority to impose an income tax on individuals. In 1861, Abraham Lincoln signed into law the Revenue Act of 1861, which imposed a 3% income tax on incomes above $800. This was increased over the years until it reached a maximum rate of 77% in 1918.

The Federal Income Tax

As the country grew and changed, so did taxation laws. In 1909, Congress passed the 16th Amendment to the Constitution which gave them the power to impose a federal income tax. This amendment set off a flurry of additional taxes including corporate income taxes, gift taxes, excise taxes, and estate taxes. The federal income tax rate peaked at 94% in 1945, when the top rate was imposed on incomes over $200,000.

Sales Tax as We Know It

In the 1950s, state governments began to introduce sales taxes. These taxes were initially imposed on items such as cigarettes, alcohol, and gasoline but have since been extended to other items such as clothing and food. Today, most states levy some form of a sales tax with rates ranging from 2.9% in Colorado to 7.75% in California.

The Internal Revenue Service

With the federal government needing to collect taxes from its citizens, the Internal Revenue Service (IRS) was created in 1862. The IRS is responsible for administering and enforcing laws regarding federal taxes as well as collecting unpaid taxes. It also provides services such as assisting taxpayers in filing their taxes and providing guidance on proper tax practices.

The Push To Lower Taxes

Throughout the years, various tax laws were enacted to alleviate some of the burden of taxation. The Revenue Act of 1954 reduced income tax rates and excluded certain types of income from taxation which allowed taxpayers to keep more of their hard-earned money. Furthermore, legislation such as the Tax Reform Act of 1986 simplified the code by reducing loopholes and limiting deductions.

Recent Tax Cuts

In recent years, the Bush-era tax cuts have been particularly influential in reducing personal and corporate taxes. The Tax Cuts and Jobs Act of 2017 provides a 20% deduction for pass-through businesses that are organized as partnerships, sole proprietorships or S corporations. This provision has enabled many small business owners to keep more of their profits.

What Taxes Pay For: Your Tax Dollars at Work

Taxes are essential for financing the operations of government. They fund public services such as education, infrastructure, and healthcare. Without taxes, these services would not be possible.

Taxes fund public services like schools, roads, and police departments

Taxes are an unfortunate, yet necessary part of life in order to support important public services like schools, roads, and police departments. Education, infrastructure, and law enforcement are essential to maintaining our societies and without proper funding, these services can suffer greatly.

Money collected through taxes is used by governments to help the community, the most basic of government services such as health care, social security programs, and emergency services. It’s also used for more specialized programs such as investment into scientific research or local businesses.

With taxes being a major source of revenue for governments, they are crucial to ensure that everyone has access to the same basic public services.

Without taxes, the government would not be able to function

Taxes are an essential component of a functioning society; without them, the government would not have the resources to maintain the services and programs our citizens rely on. They fund important institutions such as public schools, police forces, and infrastructure; they also provide necessary social security benefits to those in need.

While no one wants to pay taxes, it is necessary to ensure that our government can run smoothly and provide a stable life for its people. By ensuring taxes are collected and spent properly, we can ensure that our society continues to thrive.

Taxes help to ensure that everyone contributes to the society in which they live

Taxes provide a way for people to help ensure that everyone contributes to the society in which they live. Taxes finance local, state, and federal programs, such as public transportation, infrastructure maintenance, and healthcare. Additionally, certain taxes may fund loan programs for underprivileged communities to increase access to education and entrepreneurship opportunities.

The payroll tax specifically funds Social Security and Medicare, two of the most important benefits for American citizens. Without the proper funding, these programs could not exist. The payroll tax is also used to finance unemployment benefits which help people who are laid off or out of work due to economic conditions. In addition, certain taxes go towards national defense and helping veterans.

When we pay these taxes, we demonstrate our commitment to keeping our society running smoothly and providing equal access to resources for all its citizens.

Paying taxes is a way of showing our civic responsibility

Paying taxes is essential for the functioning of a nation, and it should be viewed as an opportunity to promote our civic responsibility. Everyone must do their part in keeping the country properly funded, thus allowing it to achieve its goals and take care of its people.

Paying taxes is essential for the functioning of a nation, and it should be viewed as an opportunity to promote our civic responsibility. Everyone must do their part in keeping the country properly funded, thus allowing it to achieve its goals and take care of its people.

Tax money provides critical necessities like roads, schools, and hospitals, as well as things like national defense and public safety. Paying taxes also means that everyone harvests the same benefits from these services and resources – no matter their origin or financial wealth.

Citizens have an obligation to provide for their communities and performing proper taxation enables them to fulfill those obligations in the most effective way possible. Paying taxes is more than just a legal requirement; it is a chance to demonstrate dedication and responsibility toward the betterment of society.

Taxes can be used to encourage or discourage certain behaviors (for example, by taxing cigarettes)

Taxes are an important tool in influencing behavior. We see this in action when we tax cigarettes, as it provides a financial disincentive to smoking and helps raise public awareness of the dangers of the practice. Taxes like these can be enacted to discourage activities that experts deem to be unhealthy or detrimental to society.

However, taxes can also be used to promote positive behaviors, such as by offering income tax credits for investments that generate renewable energy for the public good.

Ultimately, taxes provide us with a powerful tool in shaping our society through encouraging and discouraging both good and bad behavior – all while creating revenue needed for governments around the world.

Everyone pays taxes, including corporations and the wealthy

Taxes are a requirement for all citizens, regardless of income level. Everyone from low-income earners to wealthy corporations has an obligation to fund their governments by paying taxes. It can certainly be frustrating for those with lower incomes as the amount paid is often a larger share of their income, but taxes are necessary for funding public services such as infrastructure, education, and health care which benefit us all. While the wealthy and corporations may pay more in taxes than individuals, they still need to uphold their contribution to keep society functioning properly.

Why Do We Have To Pay Taxes?

Although it may be unpleasant, paying taxes is an important civic duty that helps to fund vital public services and ensure that everyone contributes to the society in which they live. By paying our taxes, we are showing our responsibility to the community and helping to create a better world for everyone. Tax money is used to provide essential public services such as infrastructure, education, and health care. These services benefit us all, allowing us to live in a safe and thriving society.

Taxes also help to reduce inequality by the wealthy paying their fair share of taxes. Without taxes, the gap between rich and poor would increase exponentially, leaving many individuals and families struggling to make ends meet. By paying our taxes, we are helping to ensure that everyone has access to the resources they need.

Get Tax Planning Help Today!

Next Gen Financial Planning offers comprehensive tax planning services to help you make the most of your finances. Our experienced team can guide you through all aspects of tax planning, from filing your return to understanding the latest tax laws and regulations. We’ll work with you to identify deductions and credits that can reduce your taxes and maximize your savings. Our goal is to make sure you get the most from your taxes so that you can focus on achieving your financial goals. With our help, you’ll be able to save more of what you earn and reach your dreams faster!

Frequently Asked Questions

Tax revenue is typically used by state and local governments to fund public services, such as education, public health programs, and infrastructure. It can also be used to pay off debt or fund social security programs. In addition, some of the money collected in taxes may go towards special projects like space exploration or scientific research.

The main types of taxes are income taxes, sales taxes, property taxes, and estate/inheritance taxes. Additionally, there are excise and payroll taxes. Each one is different in how it’s calculated but all provide essential services to our society.

The Federal Insurance Contributions Act (FICA) is a law that requires employers to withhold payroll taxes from employees and match their contributions. This money is then used to fund Social Security and Medicare. The current FICA tax rate is 15.3%, which employers must split with employees equally.

Payroll taxes are taxes that are withheld from an employee’s wages and used to fund various government programs, such as Social Security and Medicare. They are generally calculated as a percentage of the employee’s total wages or salary. Employers are responsible for collecting these taxes from employees and remitting them to the appropriate tax authorities.


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