Direct Tax Chapter 4

Summary

A known media company named Nationpost published an article talking about Illinois having an income tax increase. The current situation in Illinois is that they are $8.7 billion dollars in overdue bills and the state believes that increasing taxes will solve their dilemma. Currently the personal tax rate is 3% and increase to 5% shortly overall that equates to $600 for every $1000 in state taxes. Similar situation happened in BC where the HST was introduced but could not compare to Illinois’s taxes. Their government makes it believable that extra tax charges are temporary but in reality it would be permanent because in Canada the government 94 years ago has said that income tax was temporary.

Connections

            The article relates to a term in economics and this term is called direct tax. Direct tax can be defined as a tax imposed on the person who is intended to pay the tax. Everybody in the working fields receives a salary of what they work for but when tax increases are introduced nobody is ever content. Tax increases means more money to dish out and less food on the table. Sure the increase wouldn’t hurt the riches but how about those who rely on their weekly pay cheques to survive? The extra 2% change could eliminate a day’s worth of meals. The taxes go towards the government to pay off bills and other expenses but usually it should come back to the city and that’s all the citizens of Illinois could hope for.

Reflection

            Everybody is exposed to taxes because either you pay for it or your parents do. Taxes is a very important concept to learn because there are very different unique types that you should understand. Earlier on I talked about how increasing taxes could really hurt individuals who rely on their weekly cheques. These people often feel hopeless because of the increase and they would have to cope with it because the government rarely creates a flawless balanced system that helps this level of society. I have a few cousins who are in this situation right now except they are dealing with HST and it certainly makes them have a second thought before buying goods.

Source: http://fullcomment.nationalpost.com/2011/01/13/illinois-hikes-taxes-66-in-financial-highwire-act/