Increase of Taxation Effect on Middle Class

Topics: Business, Tax, Taxation Pages: 4 (1666 words) Published: May 7, 2013
Increase of Taxation Effect on Middle Class
Effects of Taxes are needed in order to securely administer and fund different governmental organizations, as well as construction and other universal infrastructure services. Many proponents of taxes suggest that taxation is way too extreme within the present day economic trends that exist within America. Taxes do fund many programs and construction of certain projects within America, but also affect certain aspects of America's economy. Taxes do present positive as well as negative characteristics within an economic system. Increased taxes do have a direct effect toward consumers, businesses, and the overall economy. Consumers are exposed to extreme effects of taxes, and may even be affected more than any other group within the economy. Increasing prices on their products due to the increased taxes makes up most of the potential profits for businesses. The consumers therefore lose out because of the increased prices, and must decide on another budgetary analysis. For example, a consumer who is introduced to new taxes may decide to stop purchasing a certain product. A consumer may choose to not purchase a good that my normally go along with another good. This good is a complimentary good and may not be bought because of increased taxes. According from article about tax increase on alcohol, “Some students said they will purchase certain types of alcohol."I won't be buying this (hard alcohol) stuff, probably just Budweiser," said Brian Pinuleac, senior in LAS.” (The Daily Illini) For instance, a consumer usually buys higher priced brands of beers, and due to higher taxes; the consumer may be content in purchasing generic brands of beers instead of the normal purchase of higher priced brands. This is labeled as substitute goods, and denotes how a change in taxes will cause a consumer to substitute other goods, and in this case a cheaper good, in place of the normally purchased good. Another phenomenon that exists with...
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