The Reality of Low and High Taxes

Last updated on November 6, 2022

Earlier this year, there was great disagreement over raising taxes on the wealthy. Many believed that raising taxes would not affect the very rich to a large extent; rather it would affect the services they provide and the people they employ. But statistics reveal that the tax increase on the wealthy did not affect services as believed.

However, high taxes can lead to problems such as tax evasion. When Apple Inc. was questioned by the government for tax evasion, they cited the high corporate tax rate as the reason for using legal methods to evade taxes in the U.S. Although the corporate tax rate remains the same, the IRS has increased its efforts to curb tax evasion by using Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP).

On the other hand, low taxes can also be unhealthy even though they sound tempting. Promises of lower taxes must be scrutinized to see how realistic they are. Lowering taxes is not the best idea if it adversely affects the quality of the everyday services we take for granted. The actual cost of services such as healthcare, education, and even garbage collection, is very high. When we consider this, it seems hard to believe the promises of lowering of taxes without losing quality in service.

The complicated reality of taxes is that both low taxes and high taxes can be bad for taxpayers and the economy.  The quality of government services must be weighed against the tax burden on taxpayers.