What should everyone know about economics
The state offer is paid for by the citizens
A country with a functioning community is expensive. Roads need to be built and hospitals built. Kindergartens, schools and universities are just as natural for us as the police and the armed forces. Socially disadvantaged people should also be supported.
In order for a state to be able to offer its citizens these and other services, it makes them pay. After all, the offer is available to everyone - at least in theory.
The federal, state and local governments all contribute to this offer, which they finance from the taxes they collect. However, some of the income is also divided: for example wage and income tax or sales tax. They are part of the community taxes.
At the federal level, the cash register rings when we drive, consume tobacco or drink coffee. The federal government does not have to give up any of this income. State taxes include inheritance, property and beer taxes.
And the treasurers of the communities are particularly happy about dog owners and second home owners. The community can keep their taxes entirely to itself. Just like the property tax, which is due when buying and building land, and the trade tax, which companies have to pay. These two taxes bring in most of the money for the municipalities.
Tax justice requires a complex system
The Federal Ministry of Finance listed more than 40 taxes in an information brochure in 2013. Countless laws with just as many exemptions stipulate how the individual taxes are to be levied. That makes the German tax system a confusing jungle of paragraphs.
However, it is the result of a very good approach: everyone should pay taxes according to their economic situation and the personal circumstances in which they live.
A married father with three children usually has less of his income at the end of the month than a single who earns the same. So it is justified to tax the income of the single person higher.
What always causes confusion is how VAT is set. The state collects them for almost everything we buy. Some of it is taxed at the general rate - i.e. 19 percent - while others are only taxed at seven percent.
Why, for example, only seven percent is added to sausage at butchers, compared to 19 percent in restaurants, is a mystery to many consumers.
However, there are other insane taxes that have been historically documented. In England in the 12th century, the so-called murder tax was known, which had to be paid by the responsible governor to the liege lord if the murderer could not be caught within six months.
And in France, until the 19th century, the number of windows was used to calculate the amount of window tax: the more windows, the bigger the house and the more affluent its owner.
Taxes financed the lifestyle of those in power
Ever since emperors, kings, or rulers in general, the subordinates had to pay taxes. Authorities have always been creative when it comes to inventing sources of income.
In the Middle Ages, tariffs were levied on the use of land or waterways. There was also a fee to cross bridges or to moor in a port. The rulers used the income to finance their privileged lifestyle, building roads and irrigation systems for the people.
A not inconsiderable cost factor arose when wars were waged. In times when money was not yet a means of payment, farmers paid their debts with grain or other crops. Another possibility was to make one's own labor available to the landlord.
Tax justice is an idea of the modern age. In earlier centuries taxes were arbitrary. Often enough the people were so impoverished that they could not meet the demands.
That was, for example, one of the reasons why the French Revolution came about. The peasants resisted paying excessive taxes, while the money in Versailles was thrown out the window with both hands.
Adam Smith devises a fair tax system
The English economic theorist Adam Smith was one of the first to think about a fair tax system in the 18th century.
Above all, it should only demand so much from people that they had enough to live on - an important prerequisite for being able to continue working. This was the only way to ensure that they would continue to pay taxes in the future.
In England, too, the first general income tax was introduced in the 18th century. It was groundbreaking in the history of taxation.
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