Why Do Taxes Exist? (11 Reasons Why)

Photo of author
Oberon Copeland

Oberon Copeland is a graduate of Southern Illinois University Carbondale, with a degree in economics and HR.

Just hearing the word taxes is scary to most of us. They need to be filed on time, and once they accumulate, you find yourself in debt without even asking for money.

We dug deeper into the question, ‘why do taxes exist?’ to help you understand their importance. Here is what we found!

Why Do Taxes Exist?

1. Infrastructure

First and foremost, you must bring yourself to a basic understanding that your mere existence in a country is of a cost.

Part of the taxes you pay goes towards building roads to help you travel smoothly from one place to another.

Taxes are also spent on planting trees alongside these roads and making parks and open spaces that you aren’t charged to enter or sit in.

Electricity and other resources used by such public facilities are also paid off using this tax money.

2. Public Services

Public services are major consumers of tax money and for a good reason.

Public schools and hospitals are the go-to because they provide adequate service for an adequate cost.

Tax money is also spent on health insurance to help reduce the costs of medical care, be it health professional salaries or the cost of medical instruments.

Unfortunately, healthcare is a major issue for numerous governments worldwide. Many governments cannot provide appropriate aid to their people because medical equipment and medications are costly.

These expenses can’t be paid from the government’s pocket money alone. That’s when taxes come to the rescue.

3. Social Security

Every individual in society has a social security number. It’s mainly to identify people. But it’s also used to calculate the time you have spent employed and how much your income is.

This will contribute later on to your retirement, as a small portion or percentage of that salary is drawn towards your retirement income.

Read More:  Why Are Coinbase Fees So High? (7 Reasons Why)

You can also use this social security number to gain governmental benefits. For example, if you’ve been unable to find a job for a while, the government can give you some benefits to help.

The government will also use some of the tax income to send you unemployment aid while you look for another job.

4. Imports

Imported goods are always more expensive than locally made items.

This isn’t only because they have added shipment expenses; there’s also the storage and delivery, which pump up the price a little more.

A part of your taxes goes towards managing and storing these goods. But additionally, another part goes to the port workers. This is because ports are public facilities that are essential for a nation’s economy.

Taxes also go to other important facilities like airports. The money goes to the maintenance of their amenities, like runways and luggage transport vehicles.

5. Agriculture

Food sustainability is mainly handled by governments. They are required to plant different foods and grow them on large scales.

To save a country from famine, a government should cover at least 60% of that nation’s food supplement usage.

Again, another part of your taxes is taken towards this to make locally grown foods cost-effective and affordable.

This makes it a little bit easier for those who have difficulty securing enough money. Taxes also ensure that the quality of these local items is up to the mark.

6. Common Resources

Common Resources

Another portion of these taxes is taken towards improving public services like police and firefighting departments.

Governments must provide proper facilities for training individuals and additional facilities to enable them to practice this training.

Read More:  Why Is My Visa Gift Card Being Declined? (5 Reasons Why)

These facilities include police stations, courts, jails, etc. They need to be built in a way that represents the standard of a nation, which can be a little expensive.

Governments are also obligated to provide sufficient wages for these individuals. Tax money greatly helps with that.

7. Economic Security Programs

Individuals must be able to find their needs easily. To enable them to do so, governments are required to provide for these needs consistently.

By needs, we are referring to electricity availability, clean water running from your taps, and gas being always available for you to pump into your car.

Gas, water, and electricity bills are a lot more expensive than you think. The government actually reinforces the part you pay.

This means the government covers the remainder of the cost to provide you with these services consistently.

8. Interest on Debt

Governments borrow large sums of money from foreign central banks or the World Bank to freshen up their economy.

As we all know, the money taken is always returned with interest.

This interest is largely compensated to the lender for what they could have benefitted from if they were to use the money and not lend it.

So, a part of an individual’s taxes is paid towards this interest.

9. Defense

Most importantly, a sum of the taxes paid is taken towards enhancing a nation’s defense forces.

Governments spend a great deal of money on military workforces and equipment, ranging from defense weapons to vehicles to wages.

Armies must always be alert and provide all necessary paraphernalia to keep the nation safe.

This is important because it provides the nation with a sense of security. Security is directly proportional to productivity.

10. Veterans Benefits

While serving in the military, you’re risking your life every day solely for the love of your nation.

Read More:  Why Do Markets Exist? (13 Reasons Why)

Veterans or retired military servers are paid a special amount of income complimentary from the government.

This amount is paid in gratitude for all their hard work. It’s paid from the taxes other individuals file.

Alongside veterans, disabled people also receive the same treatment from governments to compensate for their hardships.

11. Unemployment and Labor Benefits

Lastly, one more portion of your taxes is paid towards the aid of individuals struggling financially.

Now, we do understand that it’s not entirely your fault that someone has lost their job.

However, the government opts to provide them with temporary aid while pushing them toward finding a way to make a living.

They don’t encourage people to stay home and do nearly nothing. But it’s a way to ensure that everyone can live just about comfortably while transitioning between careers or jobs.

The Bottom Line

So, why do taxes exist? Mainly for the government to continue supporting its people. The government is a group of people a country elects to keep the country on the right track.

These people won’t be able to manage the country from their own pockets. The tax money we all hate goes a long way in supporting the entire country’s infrastructure.

Senior citizens and disabled veterans who can’t earn money will make a living out of those taxes.

Additionally, these taxes will support the economy, import and export procedures, and more. So, the next time you file your taxes, think of the good you’re actually contributing to.


Leave a Comment