Taxes are compulsory payments made to the government by individuals and firms. Both overtaxing and undertaxing lead to the inefficient allocation of resources, resulting in market failure.
While undertaxing brings the economy closer to the optimal level, overtaxing may discourage producers from producing and output produced will be lower than the optimal level. In some circumstances, foreign producers may even decide to locate elsewhere to avoid paying such high taxes. In the latter, society's welfare is even lower than before tax. Thus, overtaxing is definitely more problematic as compared to undertaxing.
On the other hand, most cities are building new slums faster than they can save from destruction and renew their old slums. Urban decay and blight are diffusing into new areas faster than all the huge sums of money spent on urban redevelopment and public housing can relieve existing slums. This would definitely happen as long as our urban tax system subsidises slums by undertaxing and deter improvements by overtaxing.
Moreover, overtaxing may add on to the burdens of the lives of the people and firms. Thus, this may make the lives of the people more difficult and firms may close down due to the high taxation.
Thus, it is no doubt that overtaxing is more problematic than undertaxing.
~Wan Ying (13) ;D
While undertaxing brings the economy closer to the optimal level, overtaxing may discourage producers from producing and output produced will be lower than the optimal level. In some circumstances, foreign producers may even decide to locate elsewhere to avoid paying such high taxes. In the latter, society's welfare is even lower than before tax. Thus, overtaxing is definitely more problematic as compared to undertaxing.
On the other hand, most cities are building new slums faster than they can save from destruction and renew their old slums. Urban decay and blight are diffusing into new areas faster than all the huge sums of money spent on urban redevelopment and public housing can relieve existing slums. This would definitely happen as long as our urban tax system subsidises slums by undertaxing and deter improvements by overtaxing.
Moreover, overtaxing may add on to the burdens of the lives of the people and firms. Thus, this may make the lives of the people more difficult and firms may close down due to the high taxation.
Thus, it is no doubt that overtaxing is more problematic than undertaxing.
~Wan Ying (13) ;D
No comments:
Post a Comment