Who Are the Taxpayers?

Introduction

The term “taxpayer” refers to an individual or entity that is liable to pay taxes to the government. Taxes are the primary source of revenue for the government, and they are essential to fund various public services such as healthcare, education, infrastructure, and defense. However, the notion of taxpayers is often perceived as a group of individuals who are burdened with taxes, and their views are critical to the formulation of tax policy. This article aims to provide an in-depth understanding of who the taxpayers are, their contribution to the economy, and their impact on tax policy.

Types of Taxpayers

Individuals

Individual taxpayers are the most common type of taxpayers, and they encompass a broad spectrum of society. They include employees, self-employed individuals, investors, and retirees. Their income is subject to various taxes, such as income tax, payroll tax, capital gains tax, and Medicare tax. The Internal Revenue Service (IRS), the federal agency responsible for collecting taxes, determines an individual’s tax liability based on their income, deductions, and credits. In 2019, there were over 153 million individual taxpayers in the United States, accounting for 91% of all tax returns filed.

Businesses

Businesses are also taxpayers and are subject to various taxes, such as income tax, employment tax, excise tax, and sales tax. Business taxes vary depending on the type of entity, such as sole proprietorship, partnership, corporation, or limited liability company. In 2019, there were over 16 million business taxpayers in the United States, accounting for 9% of all tax returns filed.

Non-Profit Organizations

Non-profit organizations are also taxpayers, and they are subject to various taxes such as income tax and employment tax, except for those recognized as tax-exempt under Section 501(c) of the Internal Revenue Code. Non-profits are required to file annual tax returns, known as 990 forms, with the IRS to maintain their tax-exempt status.

Federal, State and Local Government

The federal, state, and local government are also taxpayers and are subject to the same taxes as businesses. However, they are not subject to income tax as they are exempt from paying federal income taxes. The federal government collects taxes from individuals and businesses to fund its various programs, while state and local governments collect taxes to fund their respective public services.

Contributions of Taxpayers to the Economy

The contributions of taxpayers to the economy are significant and cannot be understated. They provide the necessary revenue to the government to fund various public services, which are crucial for the growth and development of the economy. Public services such as infrastructure, education, healthcare, and defense, among others, contribute to economic growth as they create job opportunities, increase productivity, and drive innovation.

Taxpayers also contribute to the economy by providing investment capital, which is essential for businesses to grow and expand. Investments are critical for the growth of start-ups and small businesses, which are a significant source of job creation in the economy.

Taxpayers also contribute to the economy through their consumption. Consumer spending is a vital component of the economy as it drives economic growth. Taxpayers’ income tax refunds and stimulus checks have also played a significant role in boosting consumer spending, particularly during the Covid-19 pandemic.

Impact of Taxpayers on Tax Policy

The views of taxpayers are critical to the formulation of tax policy as they are the ones who bear the burden of taxes. The tax policy affects taxpayers’ income, savings, and consumption, and as such, it is important for their views to be considered in the formulation of tax policy.

One of the ways taxpayers’ views are incorporated into the tax policy is through the public comment period. The IRS conducts public comment sessions before it finalizes tax forms and instructions, and it is during this period that taxpayers can provide feedback on the proposed tax changes.

Taxpayers’ views are also represented in the legislature by their elected representatives. The lawmakers are charged with the responsibility of formulating tax policies that promote economic growth and fairness. However, it is essential to note that lawmakers’ views may not always align with taxpayers’ views, leading to conflicts and debates over tax policy.

Conclusion

Taxpayers are a critical component of the economy, and their contributions cannot be overstated. They provide the necessary revenue to the government to fund various public services, which are essential for economic growth. Taxpayers’ views are also essential to the formulation of tax policy as they bear the burden of taxes. The government must consider taxpayers’ views and strike a balance between promoting economic growth and fairness in tax policy formulation.

Taxpayers are the individuals or legal entities that are required to pay taxes. A taxpayer, according to the IRS (Internal Revenue Service) and tax law, can be an individual, a corporation, a partnership, a trust, an estate, a joint – stock company, a syndicate, a pool, a joint venture, a group, or an unincorporated organization or group. No matter the specific type of legal entity, the burden remains with the entity to discharge the liability for the tax burden.

The funds and fees charged to a taxpayer are used to fund government fees and expenditures.

Taxpayers may be eligible for tax credits or refunds if they meet particular qualifications that have been established in law. For individual taxpayers, they may be able to be relieved of some of their tax burden according to their income levels.

Corporate taxpayers may find their tax burdens alleviated if they are involved in particular fields that the jurisdiction assessing those particular taxes in the region in which the taxpayer in question is located or conducts their business.

There are a wide variety of organizations that have developed in order to try to help taxpayers find ways to have to pay lower taxes. Some of these tax payer organizations focus on the struggles of tax payers in a particular state, although others have expanded to take up the fight of tax payers on a national level.