Q:

Why do people have to pay taxes?

A:

Quick Answer

The three primary purposes of taxes are to fund the government, redistribute wealth and mitigate the negative effects of many consumer products. Without the taxation system, the government and most social services would not be able to function.

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Full Answer

The primary function of taxes is to create a stream of revenue for the government. Almost of every aspect of the United States government is paid for by taxes, from politicians' salaries to the building of roads. Taxes allow the government to maintain an active military, fund public education, provide public services such as parks and libraries, finance scientific research and space exploration, enforce laws and build public landmarks. Taxes also serve to redistribute wealth from the rich to the poor. By charging higher taxes to those with higher income, the government ideally helps spread wealth to lower-income citizens. This type of redistribution can be seen in social services such as Medicare, which provides medical care to U.S. citizens age 65 and older, and the Supplemental Nutritional Assistance Program, which helps low-income families pay for food. Taxes are also intended to offset the harmful effects of many widely used consumer goods. Items such as gasoline and electronics exert a considerable negative impact on the environment, so these items are taxed in order to fund measures to combat their damaging effects.

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Related Questions

  • Q:

    Why do people pay taxes?

    A:

    People pay taxes in order to facilitate the running of government with regard to payment of salaries and running of programs aimed at bringing development to the country. Payment of taxes is both a civic duty and a requirement of the law as articulated in the United States Constitution under the tax code, Article 1 Section 8.

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  • Q:

    Do you have to pay taxes on gambling winnings?

    A:

    According to the Internal Revenue Service, gambling winnings are fully taxable and must be reported to the IRS. This includes money won from the lottery and horse racing as well as casinos. It is the taxpayer's responsibility to claim all winnings.

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  • Q:

    Do the Amish pay taxes?

    A:

    The only tax Amish and Mennonites are exempt from is the Social Security tax, and only if they are self-employed. For the most part, they pay the same taxes that other Americans do.

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  • Q:

    Do I pay taxes on a court settlement?

    A:

    In most cases, monetary damages awarded by a court of law in the United States are treated as taxable income, with the exception of awards for physical injury or physical sickness. According to Nolo, these exceptions are explained in code 26 U.S.C. § 104(a). Other monetary awards arising from law settlements are taxed at ordinary rates.

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