Let's just say it like it is, taxes are a controversial topic and they have been for
a very long time. Before I could teach you all about tax systems and how to actually
do your taxes each year it will help if you understand why taxes exist and why they're
such a hot button issue in the United States and around the world. So this entire video is
dedicated to one of the world's longest running and most heated debates; why do we pay taxes?
Taxation is when a government or other authority requires its citizens to
contribute money to them. Paying them in what are known as taxes. Taxation
has existed in some form in nearly every civilization for thousands of
years. Today the United States has plenty of different kinds of taxes,
each with its own rules and regulations about who pays what and when. Income tax, property tax,
and sales tax are the most prevalent of these. Each of the different types of taxes are super
important to know about so we're going to cover all of them at some point during this course.
Now whenever we're talking about taxes you can expect some pretty heated arguments so
to help teach you about the nuances of these discussions I brought a little help. I'd
like to introduce you to my brother Justin and my other brother Justin.
Yeah, our parents weren't very creative with the names. Kind of just stopped after the one. So my
brother here who's trying something new with his hair is very pro-tax and he sees them as
the government's way to ease all of society's problems. And my brother here who never takes
his hat off is very anti-tax and sees a government taking money from its citizens no matter what that
money is for as an abuse of power that shouldn't be tolerated. Now I'm going to take a step back
and let these guys teach you about the three main purposes of taxes in today's society,
and if things get a little too heated I will step in and calm them down, okay? Okay.
Let's get into it
one of the main purposes for taxes in today's society is to fund public projects and
programs. Things like road maintenance, fire departments, public schools, the military,
and other government-run public services are all funded through taxes. It's kind of like one big
nationwide crowd fund except with crowdfunding you get to choose whether you want to contribute or
not, you're not forced to. Would you be willing to pay for road construction? Referendums would allow
local taxpayers to choose whether they wanted to contribute to that project or not and then
the funds would be collected through taxes so that citizens don't have to donate their
money directly. Do you want firefighters asking you cash or credit before they save your house?
Sure, some public services are best funded through taxes but not everything. Exactly,
because governments collect money through taxes and then use them to pay for public services,
they make sure that all the features necessary for functioning societies are fully funded well
ahead of time. A lot of that money isn't used for public services though it just goes right in the
pockets of government employees. Well yeah, I mean government jobs are still jobs and their
employees still need to be paid since they're public servants they are serving all of us,
the public, so we should be the ones paying for them. No, no, no, no, no,
no, no, I'm not talking about them. I'm talking about the lawmakers who set their own salaries
extremely high and then cash in on our hard-earned money. Yeah, that's a good point. It can seem a
little fishy when lawmakers make so much money off of our tax dollars. But the question as to
whether or not their jobs are worth that much money is a completely different discussion.
One of the government's responsibilities is to keep its citizens happy and people aren't too
happy when they're so poor that they're struggling to survive. Taxes are used to redirect some money
from the rich into services that help the poor so that they can lead a better, happier lives. So the
more successful people get taxed more. Well that just doesn't seem fair, nobody's going to have the
incentive to work hard to become rich if they know that the taxes are going to make them poorer than
before. That's not completely how it works. Thanks to our progressive tax system and tax brackets,
whoever has the most money before taxes will still have the most money after taxes. We're going to
learn more about tax systems and tax brackets in the next few lessons. Sorry for interrupting.
The point is if poor people don't want to be poor they should focus on working hard to
become successful. The government just doesn't have the right to play Robin Hood. It could be
very difficult to escape poverty if you don't have access to things like good education or
basic necessities like food. If tax dollars are used to help with those things then poor people
can focus more on working hard and saving money so that they can escape poverty. Yeah,
that's fair. I know as well as anyone it's hard to focus on work when your tummy keeps rumbling.
Taxes can also discourage people from buying things that hurt themselves or others and
tax deductions can encourage people to spend money on things that help society.
Tax deductions are kind of like the opposite of taxes, they're the government giving
you money back. We'll learn more about tax deductions in another future lesson. Okay,
continue. That's just the government making decisions for people about what's good or bad.
Not really, people could still spend money on cigarettes or college tuition it's just that
the government gives you an extra reason to choose one over the other. Why is that the government's
concern? Because that's what our government is for. Acting in the best interest of its citizens.
The same thing can be done to improve the nation's economy. By raising taxes on imported goods it
makes people more likely to spend their money on stuff made here. Do you think that maintaining the
economy isn't the government's job? Manipulating imports and exports doesn't necessarily improve
the economy either. Besides, favoring Industries over each other violates people's freedom of
choice. Okay, we are gonna stop that right now. Whew, sorry about that. Uh, sometimes my brothers
can go a little work taxes and get pretty angry so I'm just gonna let them cool down for a minute.
As you can probably see people can have very different opinions on how taxation works and
what it's actually used for, but don't just take it from my brothers and I, ask some trusted adults
what they think about taxes, or better yet have them sit down and watch this video with you so
that they can expand on some of the points my brothers made. Whether you think taxes are good
or bad or maybe you're just indifferent to the whole thing, the reality is we do have to pay
them so it's important to understand how taxes work. In the next lesson, I'm going to teach you
all about different tax systems including the one we have here in the United States. See you then!