Reasons for Imposing Taxes

by Gilberto Fuentes ; Updated September 11, 2015
According to the IRS, more than 263 million returns were processed in 2009.

Governments around the world commonly raise money by imposing taxes on consumer spending, investment and business activity. As in many other countries, tax revenue in the United States generally funds government operations. This includes all the facilities, salaries, and logistics involved in running the country. According to the Internal Revenue Service (IRS), income tax revenue was $2.3 trillion in 2009. To ensure the flow of tax revenue, agencies such as the IRS ensure that taxes are collected efficiently.

According to the IRS, more than 263 million returns were processed in 2009.

Governments around the world commonly raise money by imposing taxes on consumer spending, investment and business activity. As in many other countries, tax revenue in the United States generally funds government operations. This includes all the facilities, salaries, and logistics involved in running the country. According to the Internal Revenue Service (IRS), income tax revenue was $2.3 trillion in 2009. To ensure the flow of tax revenue, agencies such as the IRS ensure that taxes are collected efficiently.

Government Services

One of the largest government expenses is providing services to people. For instance, local governments are generally responsible for emergency services including emergency medical responders and fire and police departments. These services are commonly paid for by property tax revenues paid annually by home and property owners. Similarly, state governments impose sales, licensing or income taxes to fund state services that include road maintenance and expansion, social assistance benefits, and education. Federal services such as social security benefits are funded from federal income taxes. According to the White House Office of Management and Budget, federal spending on social security in 2009 was about $708 billion.

Infrastructure

Tax revenue allows government agencies to play a key role in developing infrastructure. At the national level, the federal government funds programs targeted at modernizing and improving areas of national significance. For instance, the White House Office of Management and Budget reports that the 2011 federal budget includes a $418 million loan and grant program through the Department of Agriculture to support expansion of broadband Internet access to underserved rural areas. In addition, the new budget provides the Department of Transportation with $1 billion to fund high-speed rail transportation systems. The 2011 federal budget also funds a $1.4 billion project to improve the capacity of air transport. Part of the improvement seeks to change radar and weather surveillance from ground-based system to satellites.

Public Goods

Taxes also generate revenue to fund public goods from which every citizen benefits. In economic terms, public goods are consumed by everyone, and the production of public goods has no competition. For instance, military and law enforcement officers are public goods. According to the White House Office of Management and Budget, the Department of Defense budget includes spending to support military personnel. For example, the defense budget provides $159.3 billion to fund ongoing military maneuvers in Iraq, Pakistan, and Afghanistan. In addition, the budget includes a 1.4 percent increase in basic military pay and a 4.2 percent increase in housing allowances. In addition, the budget appropriations for the Department of Justice includes $600 million to encourage hiring and retention of local law enforcement personnel and more than $2 billion to fight organized and drug-related crime.

About the Author

Gilberto Fuentes draws on his experience in financial services to develop copy for websites in the United States, United Kingdom and Latin America. His work has been published in the online editions of the "San Francisco Chronicle" and the "Houston Chronicle." Fuentes lives in New York and holds a dual Bachelor of Arts in English and economics.

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