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Why can't I just be paid less instead of having TAX deducted from my salary?
I do not understand the idea of the existence of taxes.
Why can't I just be paid the amount that has taxes deducted away in the first place (including/excluding tax return, doesn't matter)?
I hope someone understands my confusion.
Your question can be understood in two different ways (or a mix of both):
First option: You are asking why you agreed on a salary of $15,000 annually with your employer, when in the end he subtracts taxes from it and you get only $12,000 in paychecks. Wouldn't it make sense to have agreed on a salary of $12,000 directly?
The answer to that is that there are three parties involved, not just two. Your employer, you and the state. Your employer does pay $15,000 (so that number matters), but you receive only $12,000. The difference of $3,000 goes to the state.
Second option: You are asking, why you have to declare your income in order to pay taxes (or get some back). Couldn't your employer just have deducted the right amount beforehand?
The answer is that taxes are very complicated in most countries, mostly because they serve several different purposes (social fairness, incentives of certain behavior,...). So to calculate the right amount you need a lot of information that your employer should not have (Privacy! He would have to have a lot of information about your life.), and in many cases even cannot have because it depends on your future actions: Most tax laws refer to a whole year as a base, but at the moment of receiving your paycheck you don't know yet what exactly will happen during the rest of the year.
Because your proposed scheme assumes the person only works one job, which is not always true.
One of the purpose of tax is to re-balance wealth in the society, in addition to, of course, financing the government. When resource is dis-proportionally allocated, people start to fight, and that is not so nice for everyone. So, tax is structured such that if you are rich, you have to pay more; and if you are poor, you pay less (or even subsidized, depending on country).
So, if I make $1,000 a year, I pay 5% tax. If I make $5,000, I pay 10% tax. However, my employer would not know how many jobs I'm taking. Only I know that. All he knows is that my salary is $3,000.
Furthermore, I may be subjected to tax reduction. For example, if I am a disabled person or I have children, I would pay less tax since my cost of living is higher. If I spend my salary on further education, I can also get tax reduction as I am not spending that money on luxury, but on ways which may contribute to society in the future.
My employer would not have this information.
These are just examples of course, different countries have different tax rates and reduction schemes.
It is also in my benefit if tax is paid later. Instead of keeping the money in the bank until taxation comes, I can use that money for investment, potentially ending up with more. After all, it is my money, I earned it and so I should have the right to use it.
Many countries do this. It's called Pay-As-You-Earn (PAYE) in the United Kingdom and the majority of workers pay their taxes in this manner. There is a reconciliation process at year-end that does sometimes result in a rebate - care is taken to avoid a taxpayer paying too little and being subsequently presented with a bill they can't pay but it does happen.
Broadly speaking, it's to spread the "tax burden" around so no one group feels unduly "picked on" in meeting a country's tax requirements.
Without getting into a debate on the rights and wrongs of taxation (and in particularly what level of services a country/state should provide, and what should be self-funded by the individual), the generally accepted position is that a country/government needs a certain amount of tax revenue each year to "make the country work". Taxes can come from a variety of sources (e.g. capital gains tax, corporation tax, income tax, sales tax/VAT etc.) but at the end of the day, a given amount of money needs to be raised.
Considering just corporation tax (tax on the profits of businesses) and income tax (tax on individuals' earnings), there are essentially three ways a government could raise £20,000 towards its tax requirements: tax the company only, tax the individual only, or tax both.
Grossly simplifying things, assuming the company makes £100,000 profit before wages, and an employee earns £40,000 "take home" per year...
After paying un-taxed wages of £40,000, the company has a taxable profit of £60,000, of which one-third goes in taxes (£20,000) and the company is left with £40,000.
The company pays pre-tax wages of £60,000, of which one third is paid by the employee in taxes (£20,000) and they get to keep £40,000. The company is left with £40,000 which isn't taxed.
The company pays pre-tax wages of £50,000, of which one fifth is paid by the employee in taxes (£10,000) and they get to keep £40,000. The company is left with £50,000 of which one fifth goes in taxes (£10,000) and £40,000 it can keep.
In all cases, the company is left with £40,000, the employee is left with £40,000 and the total taxes raised is £20,000. However, in the first case the company probably feels victimised (because only it pays taxes) and in the second case the employee feels victimised (because only he or she pays taxes). In the last case, while neither the employer nor the employee is probably "happy", at least they are both sharing the burden.
The basic purpose of taxes is to incentivize behaviors (social engineering), and to either raise funds for public services (if the taxing authority is not a fiat currency issuer) or maintain demand for the currency and limit inflation (if it is). Making income taxes an explicit accounting item, rather than something passively "baked in" (which might be possible with a universal flat tax), gives much more flexibility in social engineering. People see exactly what they are paying in taxes and are motivated to find out how they can reduce it (e.g., charitable donations).
