Abstract

The present research paper is an attempt to describe the effects of tax policy on politics and society. By understanding the relationship between these elements and effect relationship is described through political and social variables are linked to taxation. Taxation is a significant issue in self-governance as it influences both the public and the government. The political environment can be viewed through different aspects and one of them is taxation. The society is also related to taxation on many levels as all social amenities are financed through levied tax.

The sovereignty of the state is demonstrated through its functions in society, and these functions must be maintained through public funds where the most reliable source of funds is tax. The source is important because without it the state’s budget cannot work. The reality of running a government is in part based on taxation policies. Affording to leverage finance is an essential tool in establishing the authority of a government. However, the taxation policies themselves tend to impact other spheres of governance and social life and thus forcing the state to restructure its operations in a bid to align with the implications of taxation. Tax permeates many areas of society and politics and in so doing it affects the behavior of stakeholders such as the taxpayers, the government and investors. It has the capacity to attract leadership tools and socially integrating services. Nevertheless, taxation concept advances significant effects which shape processes and the formation of institutions. As such, tax policy qualifies to be an integral component of state formation with significant effects which deserve to be analyzed.

Introduction

Taxation plays an indispensable role in the operations of society. The formulation of taxation policies is one of the significant indicators of the presence of civilization. It is a system that facilitates the funding of common facilities and allows the management of the government. As such, the manner in which taxation is conducted and administered is a major concern for every society because it is capable of influencing other systems within a community. Many societal and political issues are a target of contemporary tax policies. Public expenditure is financed through taxation, income redistribution, economic stabilization, and resource allocation is also facilitated by taxation. Furthermore, economic growth is also supported by taxation which makes the process essential to overall societal development.

Tax policies undoubtedly have significant effects on the society and politics of a country. They play a crucial role in achieving fiscal policy objectives. The structure of taxation policies does not only influence economic growth, but the development of the politics of a nation are heavily impacted (Gale and Andrew 2). Social issues such as the provision of medical care, education poverty alleviation are delivered to the public by the government and are facilitated by taxation. Increased public spending indicates that tax policies have a direct impact on social life and consequently to the society as a whole.

The outlook on the foundation of operational tax structures has considerably changed over the years and varied significantly across many schools of thought. Nevertheless, the effects of tax systems are recognized worldwide while the changes in taxation over time have been influenced by the evolution of perspectives regarding tax systems and the drivers of social development. The viewpoint of the drivers of social development influences changes in tax systems indicating that the present taxation structures influence social development and they must, therefore, be aligned. Thus the effect of taxation on social systems is a discourse for consideration particularly with regards to development as it is the main objective of tax policies. Additionally, politics are closely intertwined with taxation as the stability of a state is dependent on its ability to manage projects and to finance social services. The structure of this paper presents an analysis of the effects of taxation on the politics and social elements of a nation. The effects, as well as counter-arguments of the analysis, is presented. Additionally, the implications of the analysis findings are described to help policymakers understand the repercussions of tax policy effects.

Problem

The impact of tax policy of politics and society is a significant issue of concern as these two factors are essential to any state. The issue of taxation is of worldwide importance considering that globalization has taken over world market creating the need to understand the influence of taxation on societies and politics. Understanding the influence of taxation has is critical to policymakers as it informs decision making and allows governments to shape the direction of their development in the most appropriate manner.

Research findings

The impact of taxation of politics is more evident in the construction of states as politics play a huge role in how states are formed. State formation is dependent on revenue collection. Developing a reliance on tax is essential in the construction of an administration that is founded on the capacity to raise revenue rather than on spending it (Dom and Miller 24). It inclines towards the development of a representative administration, forming the possibility of a favorable relationship between political leaders and the citizens. It leads to the creation of institutions that facilitate positive interaction between society and the state through public policy.

Tax policies are fundamental to sustainable political climates and governments as it is the pillar supporting government activities which make it effective. Any politically stable state is accountable for revenue levied in the country by demonstrating the development accrued from the tax collection system. As such, political stability is enhanced when taxation serves as a facilitator for progressive development. Taxation plays a crucial role in politics considering the power it creates in allowing citizens to be engaged in national matters. By facilitating public engagement, taxation promotes public voice, participation, equity, and the redistribution of wealth. All these factors are crucial to every society as they impact both social and political life. Through politics, citizens are able to advance their social needs to the state.

The level of taxation impacts political stability. Strong levels of taxation which empower the concern over the quality of life of citizens promote political stability. When the revenue collected by the government is used to meet the needs of the citizens, public outcry over deplorable states of living is diminished. Consequently, fewer struggles are experienced in a country as the public does not find the need to oppose the prevailing regime given that public resources are provided.

Political instability is correlated with a high tax of capital. When capital taxation is increased for purposes of redistribution, the legal system experiences a decline in investment, and the political instability promotes policy bigotry and uncertainty (Robert 5).  Successful tax policies are associated with economic and political stability.

The impact of tax policies on politics is based on a multifaceted relationship between these two factors and their relation to governance, development and public expenditure. There is a mutual interaction between the ability of a government to raise taxes, economic development, and political institutions. The relationship can be understood by the study of the history of wealthy nations who gained political stability after developing the capacity to collect taxes and facilitate development. Political stability is only gained after a state manages to enforce tax contracts since running a stable government requires funds which must be collected from the public using a strategic system. Political stability is therefore affected by low rates of tax collection because governments become weak when they are not adequately funded. With a low rate of taxation, development is slowed down and the state is unable to provide social amenities to the citizens. Subsequently, lack of public services and particularly in fragile sectors such as healthcare may cause chaos in a country.

The impact of tax policy on political stability is also demonstrated by challenges faced by the political system of post-conflict nations which lack an effective tax system. The constraints faced in collecting revenue is reflected in the political systems which in the face of economic collapse bear little significance to the public. In a post-conflict era, political stability is the most significant aspect, however, the incapacity to collect the tax by the state threatens the stability of the country since nation building cannot take place without finance. Many researchers acknowledge the strong association between the level of taxation and the politics of a nation.

Citizen engagement is a fundamental aspect of every nation as it contributes to state building. Building a nation requires that governments increase their ability to engage their citizens to gain their social interests constructively. Through public engagement, it is possible to pursue public goals and demands. Tax policies contribute to state-building through several methods.

Social programs require sustainable funding from the government, and this is only possible through taxation. Funding social programs is a factor with an immense impact on society as it seeks to meet public needs. Therefore, through taxation nation building which is a significant social factor is established. Also, taxation connects state officials with citizens and other interest groups, society gains greater confidence in the government because taxation increases state accountability. Taxation also provides a central focus around which concerned parties such as consumer groups, labor unions, and producer groups rally to support, recommend and resists tax policies.

The state can expand its territorial reach through taxation and particularly through customs and border collection and land and property taxes. Taxation allows the government to interact with different areas and sectors in the nation, as such, taxation allows the government to actively permeate society and take part in the activities of building the nation. The impact of taxation on society is observable in household income. The role played by taxation in alleviating poverty can be described with respect to the standards of living and household income. The actual poverty levels cannot be truly reflected through low household incomes as their expenditure patterns and standards of living is influenced by welfare support and the input of public services. Tax policies have an impact on the livelihoods of low-income households as social transfers improve the standards of living beyond the capacity of the household income. Hence, tax affects society by facilitating the injection of social services which in return improve the standards of living (Martin 413). Income redistribution is a significant element in balancing social life; through taxation, the government redistributes wealth. Households with a higher income pay more in taxes while the social benefits they receive are reduced; on the other hand, households with low income receive more social benefits while they are taxed less. Therefore, taxation plays a role in reducing household income disparity.

Education provision to society is another major effect of taxation on the public. Education benefits are allocated to many middle-income families. The middle-income families have the heist number of students who need support. Taxing more money to the social class in the higher income distribution segment allows the government to fund the educational needs of middle and low-income families. As such, an academic balance within the society is created through taxation. The system serves the society effectively as a majority of the population fall within the middle-income category. If taxation is not used to provide educational support the disparity in education between the high and middle class would be very high.

Taxation also impacts society through healthcare provision. Providing medical care is a fundamental necessity for every human being as it is a human right. Governments strive to enact policies that ensure the citizens have access to affordable quality care. Nevertheless, healthcare services may be costly, and there is a need to subsidize the costs. The government offers medical benefits to people from different social classes depending on their needs. Individuals in the high-income class require less medical benefits as they are capable of paying for huge medical expenses. However, it is worth noting that this is the income group that pays the highest tax though they receive the least health benefits. The lower income groups have a high number of the aged population who do not work. Therefore, the medical benefits allocated to this group of people is high which requires significant financing from the government. By the provision of health benefits to the public taxation is seen to affect the social life of individuals in a country. Without taxation, the provision of quality healthcare to all income groups would be a nightmare as the majority who are in the middle and lower income bracket will not afford the services.

Counter argument

The issue of political stability and tax policy is also considered from the perspective that political stability is what determines the level of taxation. An inefficient tax structure is associated with polarized and unstable politics in a country. The political climate and the tax structure of a nation are no doubt associated; however, political variables are the ones that drive tax policy changes, and the political climate determines the focus of taxation policies. Increased taxation is correlated with an unstable regime; this is a factor that indicates the power of the political climate in influencing taxation. Thus, although it is argued that tax policies affect the political environment, it is also evident that the political state of a nation impacts the taxation structure. During unstable regimes, tax collection processes fail as they require a stable authority to be effective. Therefore, politics can be said to play a more significant role in facilitating taxation. Nevertheless, this is not to mean that tax has no impact on the politics of a state, the relation seems to be a mutual interaction where political factors influence taxation and in return tax policies also impact the politics.

The use of taxes to cater for public services is well accepted mainly because it drives social development which is a necessity in every nation. However, the concept of progressive tax and with particular regards to income tax causes the highest percentage of tax to be obtained from a small income group. Nations with significant income inequalities tend to have a narrow tax base meaning that a small proportion of the population makes the greatest contribution to tax. With this regards, the redistributive nature of taxation is quite evident.

There is danger in such practice because a nation becomes dependent on a few individuals. The risk of losing revenue collected from these people is high in case the taxpayer chose to leave the country. Fortunately, the more wealthy people in society have sufficient resources to relocate if they want. Although it is reasonable to levy high taxes at higher incomes, in the long run, it may be detrimental to the economy of a nation. Innovation, entrepreneurship, and hard work will decline as people will fear increased task when they put more effort. Consequently, social and political development cannot be achieved when citizens fear to input effort in developmental activities.

Feasibility implementation

Findings of the effects of taxation on politics and society have significant implications as the effects do not merely permeate to influence the intended areas but are far-reaching. It is essential to understand that tax policies have effects that exceed the expectations and they may either be positive or negative. Therefore, while looking at taxation policies, it is important to evaluate the direct and indirect effect of the policy. Beyond the economic field, as observed, taxation has effects on politics and society. Though political stability is well related to taxation, political disturbance must be considered when planning on tax policies. From historical moments such as the times of Jack Cade’s revolt to the French revolution, political issues have always been attributed to taxation issues (Ruff 1063). Thus taxation effects have a far compelling effect in shaping the direction of politics other than only influencing stability. Revolutions from historical times have an association with taxation and evolution in governance is seen to keep up with taxation rates. Therefore, it must be understood that there are seen and unseen effects of taxation on society and

The findings of the study also lead to the inquiry about whether the gains of the treasury match the sacrifice placed on the taxpayer. One of the significant questions to ask is the difference between revenue doctrine and tax burden. If the treasury spends a lot of money to collect revenue more than the amount of money the government collects in levying taxes the process may not seem feasible. As such, this is not a success of the procedure given that it incurs losses. For every tax, there is a cost incurred in collecting revenue however, when the cost is higher than the value of the tax, then such a tax is undesirable. Development delivered from the tax is considered detrimental and does not benefit the taxpayer since there is a greater burden in implementing the tax policy.

With all the addressed effects of taxation, there are other undesirable effects which occur without the intention of the planner. It is essential to consider these effects since they may interrupt the flow of intended results. Particularly, with regards to social elements of taxation, this phenomenon is true. For instance, a sumptuary tax may be imposed with the aim of restricting expenditure driven by behavior which is considered undesirable by society. The focus of such taxes is to reach the profiteer. However, more often than not, the intentions of the legislature are not reflected in the effects.

Conclusion

The research analysis reveals noteworthy information concerning tax policy impact. It is demonstrated that politics benefit from good tax policies because they increase political stability. Consequently, the prevalence of a stable political state allows a country to concentrate on nation building to show the value of collected revenue to the citizens. The type of tax policies in place impacts the behavior of society. An efficient taxation structure is able to meet the social service demand of the public and therefore satisfies the public with regards to development. The provision of social support in areas such as education and healthcare is one of the most significant aspects of taxation. The issue is not about providing the social benefits but the repercussions of the action. Resources are redistributed within the upper, middle and lower class income groups ensuring that great disparities are reduced.

Work cited

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Dom, Roel, and Mark Miller. Reforming tax systems in the developing world: What can we learn from the past?. ODI Report, 2018.

Gale, William G., and Andrew A. Samwick. “Effects of income tax changes on economic growth.” Economic Studies, https://www. brookings. edu/wpcontent/uploads/2016/06/09_Effects_Income_Tax_Changes_Economic_Growth_Gale_Sa mwick. pdf (2014).

Martin, Cathie Jo. “Imagine all the people: Literature, society, and cross-national variation in education systems.” World Politics 70.3 (2018): 398-442.

Ruff, Julius R. “From Mutual Observation to Propaganda War: Premodern Revolts in Their Transnational Representations. Malte Griesse, ed. Bielefeld: Transcript Verlag, 2014. 354 pp.€ 29.99.” Renaissance Quarterly 68.3 (2015): 1062-1063.