Taxation is an extremely controversial topic in the United States because in order to continue to enjoy the American comforts of healthcare, social security, national and neighborhood defense, and regulated clean water and air, to name a few, we continue to increase the demands of our government without wanting to pay for the supply of services. Remember, money is a currency and can be used to consume, invest, save, pay loans (including credit cards), or pay taxes. If asking various families what it means for American’s to have life, liberty, and the pursuit of happiness as described in the Declaration of Independence, the responses will vary drastically.
Background: United States Economy and Reasons for Taxation
The U.S. economy is considered a mixed market economy, which combines production from private and public sectors to consumers that regulates prices based upon a supply and demand model. The private sector takes a capitalist economic approach which allows individuals to profit through acquiring capital and employing to control the production and distribution of goods or services. Due to the nature of capitalism, it promotes entrepreneurship, risk taking, competition, innovation, and economic growth. People from around the world migrate to the United States to take advantage of what we know as the “American Dream.” In 1931, James Adams defined the American Dream as:
"That dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement."
For entrepreneurs whom are willing to accept the risk associated with starting a business, some have made themselves extremely wealthy. Although our economy is focused on capitalism as a means of promoting economic growth, it also revolves around the promotion of life, liberty, and the pursuit of happiness as stated in the United States Declaration of Independence. These rights are instilled in every American citizen and people migrate from all over the world to have the same opportunities that we take for granted in this great country.
Taxes primary function is to pay for the government to provide our country with services such as national security, international relations, environment conservation, space exploration, agriculture stabilization, housing assistance, transportation infrastructure, education, unemployment assistance, health assistance, social security, veteran benefits, and administration of justice to name a few. As a society, there are a few questions that continually arise but are never decided upon. First, which services are considered merit goods, commodities that the public sector provides free or at a discounted price in order to encourage consumption (Britannica)? Second, how much of a merit good should be paid for by the government? Third, should the merit good be publicly or privately provided? Fourth, if there is a good which is not considered a merit good but has a large positive...