The return of the withholding tax system
The return of the withholding tax system has been welcomed by many economists in recent years. It has been hailed as a progressive taxation system that ensures higher revenue collection and fewer deductions. This type of taxation system is implemented when taxes are taken from an individual or a company’s earnings before the money is paid out to them. Withholding taxes occur when money is taken out of an individual or company’s paycheck to cover their income taxes. The tax system is more straightforward than other forms of taxation, as the tax is collected by the employer of the person or company before they receive the payment.
Withholding tax is presumed to be a progressive tax and serves to reduce the amount of tax deductions taken by the person or company from their taxes. This means that the amount of deductions taken by the person or company is significantly reduced as the taxes are taken out at the source, where the wages or salary is paid. A progressive tax system also helps to reduce tax avoidance, as individuals and corporations are less able to evade taxes when withholding taxes are taken out of the payrolls of employers and businesses.
The return of the withholding tax system has been seen as a major benefit for a number of reasons. Firstly, due to the progressive nature of the system, it is likely to raise more tax revenue overall as the taxes are taken out before any deductions are made. This in turn will encourage an improved budget, which is beneficial to the entire economy and to the public, who will benefit from the additional public resources and services available due to an improved budget.
The system also encourages fairness as it can ensure that everyone is paying their fair share in taxes, as deductions cannot be taken out of their paycheck before it reaches the government. This system can also help to tackle issues of tax avoidance and evasion, as even those earning the highest wages and profits cannot avoid paying taxes. This helps to reduce the amount of tax revenue that corporations can make by not paying their fair share of taxes.
The withholding tax system can provide greater transparency for the government when collecting taxes. This would be beneficial for the government, as it would make it easier for them to track down taxes that are owed and make sure that everyone is paying the correct amount of taxes.
In conclusion, the return of the withholding tax system has been welcomed by many economists due to its progressive taxation system, which ensures higher revenue collection and fewer deductions. This system has many benefits, such as greater transparency for the government, increased fairness for taxpayers, and reduced tax avoidance and evasion. Despite these benefits, the system does face some criticisms and opposition by those who believe that it places additional burdens on taxpayers. These criticisms should not be overlooked, however, as the withholding tax system can have a positive effect on the economy and public.
