Should the Government Intervent Tax Essay Example | Topics and Well Written Essays - 750 words

Should the Government Intervent Tax - Essay ExampleHence the government, in my view, should intervene through tax order to keep the economy and community controlled.Government intervention through tax rates is of paramount importance when negative externalities argon to be dealt with. The market consists of two types of goods, public and private. Private goods are associated to the concept of excludability, referring to the exclusion of people from the benefits of a product or service that do not pay for it. On the other hand, public good is non-excludable and benefits the complete population regardless of their non-payment. Free-riding issue arises in this situation leading to chaos and dissatisfaction toward those counterparts of the society who are not contributing enough to the society compared to the benefits they are receiving (for fount healthcare and security/defense facilities for tax-evaders or undocumented immigrants in some cases). Institute on Taxation and Economic P olicy (ITEP) has contributed to the knowledge by bring out that undocumented immigrants can be a major source of tax earnings if they are permitted legally to work in the US and would end up increasing the tax contribution by about $2 billion per year (ITEP, 2015).Government must intervene by changing tax rates to control consumer demands. By increasing tax rates, the government may reduce the disposable income and hence reduce the consumer demand. Similarly, if it wants to increase consumer demand, generally or specifically for authentic goods and service, subsidies can be provided and/or tax on that particular product/service can be reduced. Hence, tax rates on specific products, services or industries as well as taxes on individuals and specific population groups can both help governments to keep harmony in the economy.The government calls bills from the local economy by taxing general public and businesses. These funds are then