Taxes and How It Affects the Growth of the Country

Taxes are largely considered to be responsible for the following: a.. They distort business thinking; b.. Encourage the misallocation of economic resources; c.. Divert money to bizarre tax-motivated investments; d.. Absorb unacceptably large chunks of the GDP; e.. Deter foreign investment; f.. Morally corrupt the population, encouraging it to engage in massive illegal activities; g.. Adversely influence macroeconomic parameters such as unemployment, the money supply and interest rates; h.. Deprive the business sector of capital needed for its development by spending it on non productive political ends; i.. Cause the smuggling of capital outside the country (capital flight); j.. Foster the formation of strong parallel, black economies and the falsifying of economic records thus adversely affecting decision making processes; k.. Facilitate the establishment of big, inefficient bureaucracies for the collection of taxes and of data related to income and economic activity; l.. Force every member of society to - directly or indirectly - pay for professional services related to his or her tax obligations, or, at least to consume resources (time, money and energy) in communicating with authorities and navigating the bureaucracies that handle with tax collection on behalf of the state. Thousands of laws, tax loopholes, breaks and incentives and seemingly arbitrary decision making, not open to judicial scrutiny erode the trust that a member of the community should have in its institutions. This lack of transparency and even-handedness lead to the frequent eruption of scandals which unseat governments more often than not. All these malignant side-effects and by- products might have been acceptable if taxes were to achieve their primary stated goals. That they fail to do so is what sparked the latest rebellious thinking. At first, the governments of the world tried a few simple recipes: They tried to widen the tax base by instituting better collection, processing, amalgamation...