To What Extent Does Tax Evasion Affect the Society

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To what extent does tax evasion affect the society?

Word counts: 1510 words

The importance of the revenue to a country is well known in the world. The global financial system has more interconnections now than at any other time in history. (Simser.J, 2008, p.131). Tax evasion is one of most common crimes that damage the order of revenue. This is closely affecting the market economy and daily lives. Normally, most commentators consider tax evasion profoundly unethical. There are some ambiguities regarding the meaning of the very word “taxation” that must be addressed. It is maintained that the meaning of taxation depends neither on the agents who collect it, nor on their objectives. (Bagus, Block, Eabrasu,
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However, from some survey data, tax evasion has a negative correlation with GDP, this means that the scale of tax evasion has disadvantageous influence to the GDP. Investigating its reason, it is mainly because the income by enterprise and individual tax evasion which does not all through the legal ways of investment and consumption, there is a big part of the capital flight. In addition, some investments and spend of consumers are illegal. Therefore, on the whole, no matter from the view of current or in the future, tax evasion can be viewed as a negative influence on the national economy. The government should do some positive macro-controls to the economic phenomenon, and resolutely crack down on the behavior of tax evasion.

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Tax evasion may affect the income distribution. Tax is an important function of adjusting income distribution, which makes social income distribution trend to fair, tax evasion make this function, cannot be fully realized. All kinds of tax evasion are through the way of reducing the financial income to increase the disposable income of taxpayer. It is proposed that, the tax liability of a taxpayer is normally only a fraction of his income. This will change the original pattern of income distribution between the government and taxpayers; reduce the finally disposable share in national income distribution and increase the
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