In: Economics
The tax system fosters inequality when it falls more on the low-income earners who form the larger portion of the citizens of the country than the high-income earners. This is because the poor will pay more of the taxes more than the rich thus causing inequality in the country.
The tax system may lead to the growth of the economy or decrease in growing the economy. This is because a tax system that increases the taxes will lead to a decrease in the spending of the citizens thus decrease in the demand for goods and services thus decreases in the growth of the economy and vise versa is true.
The tax system impacts the type of market structure in the economy of the country. For example, high taxes may lead to a monopolistic market structure, this is because only those companies who will be able to pay the high taxes will remain in the market-leading to a monopolistic market structure.
I agree with the need to change the tax system .Changing the tax system will help in having a tax system that does not encourage inequality and encourages the equal distribution of resources in the economy.
I think changing the tax system is possible in the current political economy since the politician will use the change in the taxes system to achieve their political agenda.
The tax system in the economy will affect different sectors of the economy and the economy at large. This because tax system will affect the amount of income that individuals will remain with to use in his / her spending thus impacting in the growth of the economy. It will determine the number of firms that will remain operating in the market thus impacting on the market structure.
Tax system helps in the distribution of resources in the economy thus helping in solving the problems of inequalities in the country.
Tax system can easily be changed since they are normally used by politicians to foster their political agenda.