The situation with respect to taxes is exactly the opposite. After all why do we pay taxes? The justification for taxation varied at different points of time. In ancient times, taxes were collected for funding war against foreign invaders. Later, under the pretense of divine authority of the king as the owner of the entire land and thus legitimizing the monarch’s privilege to collect tribute was the reason for taxation. In modern times, it is more or less demanded …show more content…
Taxing too high (say 100%) will evoke discontent among the masses. There is another cunning way possible for governments to steal part of our incomes. In order to do so they use their territorial monopoly to ensure that besides the government no one else can issue money. They own the money mints which mint coins and the money printing presses which prints paper notes. Technically, they can practically print as much paper note as they want. But as everything has its effects, so does printing money out of thin air. It lowers the value of each currency note in circulation. This is seen as a rise in prices of most of the goods and services. We call it inflation. Inflation also erodes the value of our savings. Suppose, a person have saved a thousand bucks today and if the government increases the volume of money in the economy by twice, then our savings will become worth half its value that it had when we started saving. This happens because for each note that we had saved, there is another new note in the market available now. Thus, inflation is an indirect way of stealing of money.
The government taxes which are imposed on the producers are passed on to the consumers. Higher taxes mean higher cost of goods and services. Higher inflation means dearer the goods and services in the market. Both inflation and taxes are disastrous for the poor, and the lower income groups. The government claims that taxes and inflation is intended for the poor but is actually harmful. Therefore, we cannot say that the government is an institution of