Taxation essay Example | Topics and Well Written Essays - 1750 words

Taxation - Essay Example For example, government can come to a decision to impose lofty tax on illegal business to assist discourage the investors from venturing into the enterprises. Further, tax treatment plays an imperative role in determining to which scope the scheme appreciates inter-personal differences in lifetime proceeds. Thus, the procedure of taxation influences the conduct of small enterprises and allotment of resources to outsized firms. In relation to this, vigilant blueprint of savings and taxation leads to equalization of tax load in taxpayers with identical lifetime incomes (Blank 2004, 26). Relating to household saving, populaces save when the sum of money they desire to consume is dissimilar from the income they obtain. For example, some people may find expenditure smoothing hard to attain particularly if they have little returns. Therefore, decisions made by people relies less on long-term philosophy and more on aspiration for immediate indulgence. Finally, populaces save less when they earn smaller amounts yet have high needs. Additionally, due to poor rationality, there is a driving power to the government to build up savings, pensions, and public insurance. Regarding above, taxation consequently directly affects the wellbeing of people predominantly during the periods of joblessness or sequestration. Thus, in order to a faultless tax system, the government should rely broadly upon concepts like tax neutrality in order to structure its assessment (Diamond 2005, 99). This paper provides characteristics that will be able to identify a good tax system for an open economy and particularly suggest how the United Kingdom tax system should be reformed with the aim of making it ideal. The Mirrlee review was as a result of research that was carried by Sir James Mirrlee and his associates with the aim of analyzing and coming up with a