Autumn Justice

Taxation, whether it is local, state or federal, has always been an area of immense interest to economists and financial analysts. One question is who is the actual taxpayer- the producers or the consumers- or who bears the majority of the tax burden.
Roach (2007), argues that “Taxation is as much a political issue as an economic issue”. Politicians have been introducing tax reforms to “promote their agendas”.
In this paper, most of the arguments are presented from material from two articles- Tax Incidence, Tax Burden and Tax Shifting: Who Really Pays The Tax? And Taxation in the United States.

Tax is usually considered as a stimulant for the economy. It is believed to ignite “economic growth” as it can encourage “desirable behavior” and discourage “unwanted behavior”. (Roach, 2007). If the government, whether local, state, or federal, wants to curb alcohol drinking in the country, it would tax the companies in the alcohol industry. The price of alcohol would rise as a portion or a major part of the tax burden levied on the organizations would be passed on to the consumers. In addition to an increase in manufacturer’s recommended price, the government could impose a high sales tax; therefore, dissuading the consumers from buying alcohol.
On the other hand, if the government wants to promote a good, such as vitamin water, it would lower corporate as well as sales taxes. When the corporate tax is low, the manufacturer’s recommended price would also be low and then the sales tax on it would be lower as well. This way, the government can encourage people to use vitamin water.
The questions which arises here is whether taxation is a means to stabilize economy, boost economic growth and at the same time, ensure fair and equitable distribution of the nation’s wealth. Roach (2007) expresses that although taxation is generally thought of “a means to redistribute economic...