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What Is Tax Fairness And What Does It Mean For Investors?

A system of taxation that is equitable for all taxpayers

What Is Tax Fairness And What Does It Mean For Investors?

Tax fairness is a tool by which the state can achieve social equality. This is through the timely distribution of tax costs, and this has a much greater purpose.

It is no secret to anyone that there is social inequality. This is very evident in all its cases. This is why the government must study this gap in depth, to develop and implement public policies, capable of correctly establishing the rules for tax fairness.

However, the main objective of carrying out all these studies regarding social inequality is to fairly distribute the payment of all these costs, so that those with less amount of income, can contribute according to their income.

What is achieved through tax fairness?

When tax fairness was established, one of the main reasons for its existence was to promote various schemes that guarantee basic services for all. This includes health and infrastructure programs, as well as other areas that require special care to guarantee certain rights.

The important thing is to be able to guarantee that there is enough income to meet the necessary quota to make the necessary expenditures and comply with the aforementioned programs.

Although public policies have indeed been established to give continuity to fiscal equality, this is not a guarantee that they will be complete as established in their original concept. A joint effort is required to achieve compliance with these plans.

Even so, this is not a task that only one party should accomplish, but rather all those involved, companies, institutions and even professionals in the field, need to learn new ways to solve and better apply fiscal practices and everything related to the payment of taxes.

Perhaps tax fairness could be achieved if certain scenarios are met

The first is that rules are established so that companies do not have the opportunity to engage in bad practices concerning tax payments. Currently, a large number of these companies govern their contributions through a system of tax abuse.

On the other hand, if greater importance is given to promoting transparency, legality and integrity of the processes, then tax fairness could be achieved in a much faster and safer way for all involved.

As a last scenario, we have that, establishing rules that guarantee the correct distribution of all fiscal taxes, will ensure that resources are used in an ideal way. This ensures that resources are used efficiently.

What does it imply for investors?

First of all, it should be made clear that there are a large number of investors who are involved with the issue, so it is to be expected to see divided opinions regarding this. Such opinions may be subject to individual goals and beliefs, as well as the culture of each investor.

However, we know that most of them do not focus their attention on the fact that the whole tax system should be changed. These people are much more interested in having their companies comply with the tax requirements already in place so that they do not have to deal with penalties.

They are also fully focused on finding those loopholes that will allow them to make significant tax reductions, thus preserving their wealth.

But, some investors believe that operating under this loophole could have long-term consequences. This is not only for the investor who manages his tax affairs under this premise but also for other investors who make their payments under the legal framework.

Recognizing the impact that each of these erratic tax practices may have, and that they are increasingly moving away from tax fairness, investors could do something to correct it. It is for this reason that some proposals have been put forward that have investors at the center.

One of these proposals states that investors should have their own specific and efficient tax policy model. So that they can take into consideration the particular situation of investors (as opposed to other figures), and thus ensure that their particular needs are taken into account.

The practice of this new model for investors could be the beginning of a cycle that perhaps others will begin to implement.

This leads us to think that, if an ideal tax fairness model is to be established, under the conditions mentioned above, then:

  • Investors would have the opportunity to optimize their tax affairs, without having to operate in legal loopholes.
  • They could minimize the risks and economic consequences of ethically dubious practices.
  • Social policy programs that are developed through tax revenues could be ideally established.

Can Tax Fairness help accommodate societal problems?

Although not to a large extent, Tax Fairness can provide a breathing space for those who cannot afford to pay large amounts of taxes and allow others who produce more to cover those taxes.

However, Tax Fairness alone cannot fix the inequality produced by taxation: the government needs to help by creating other measures that make the existing ones much more effective.

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