The normal source of taxes is the net income of individuals, that is, that part of wealth which is continuously reproduced and which can be consumed without affecting the capital from which it derives. The income is contrasted by the patrimony, meaning not only the wealth used productively, but all wealth is also unproductive.
The Necessary Options
It is necessary that the tax hit income and not wealth, because if it hit wealth it would destroy the very sources (means) of producing wealth. But even without reaching this extreme degree of pressure, the tax must not excessively hinder the increase in national wealth that occurs precisely through the transformation into capital of a part of the annual net income, while that part of the income that is sold to the status as a tax is mostly withdrawn from reproductive consumption and the formation of new wealth. Excessive tax pressure is one of the main causes of poverty in some nations and one of the most serious obstacles to their agricultural and industrial progress.
About the Right Tax Options
In many cases the tax also has the necessary effect of modifying the previous structure of the national economy. A first and important example of this consequence of the tax can be found in the protective duties, which, while providing an income to the state, modify the previous production of wealth, making capital flow to the protected enterprises to the detriment of the unprotected ones, and they modify the distribution of wealth itself as it enriches producers to the detriment of consumers. Using the income tax calculator in this case offers the best support.
- Similarly, the exemption from the tax on necessary consumption, combined with a preponderant direct taxation, has the effect of correcting the previous distribution of wealth; while a slight taxation of capital income, combined with a strong pressure on necessary consumption, it would have the effect of making the previous distribution of wealth more unequal.
- Taxpayers do not always pay the taxes imposed by the legislator, but rather they often try to escape them by renouncing consumption, or by resorting to substitutes for the taxed good or even illicit means, such as smuggling, fraud, reporting only partial or complete it omission of the prescribed declaration of taxable wealth. The extent of evasion depends on various circumstances, it is first of all inverse of the degree of morality of the population, and especially of the intensity with which it appreciates public needs in comparison with private ones.
But also the rate of the tax has a great influence on the measure of tax evasion, because while the majority of the population is willing to suffer the sacrifice they deem right, there are few who, being able to do so, do not try to escape the tax, when they consider the rate of tax disproportionate. And finally the technical procedures adopted to control taxable income have great influence.