Tax and inflation are both seen as a nightmare for any working class when growing. Both have the capability of reducing your monthly income providing a source of stress and worry. Tax is a vast subject with hundreds of clauses and areas that effect both individuals and businesses. Inflation is basically the rise in basic commodity prices which increases the prices of essentials this increase in price on essential items leaves you with less money to work with.
A few points consider regarding taxation:
Taxes are everywhere no matter what you do. Income tax allows a percentage of your pay to fund government and government programs (including education). Asset taxes are those taxes in which you will have to pay a part of the value of your owned property or deposits. State taxes go to fund local government and to maintain major infrastructure and education.
There are ways to save on your taxes. From investing in a retirement plan, environmental purchases and donations given. A qualified tax representative should be consulted.
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Each country carries their own set of taxation and tax laws. Consulting a professional will help ensure compliance to current laws.
The effect of inflation
The increased prices of the essentials around can reduce the ability to purchase certain items and lower the amount funds available to pay debtors.
It reduces the net valuation of the investments as the value for that particular currency falls and thus stopping the growth in the investment.
The overall inflation rate drastically reduces the power of earning revenues for the government and the excess treasury spending begins which also can affect taxation. In several cases new taxes are implemented to meet the government spending needs which in turn pressurize the citizens to pay more tax or to reduce spending habits to several folds.
- Inflation can force some to stop investing in their retirement and act as a hardship for those that have already retired and are living on a fixed income.
The overall process has several trickled down affects which affects the general working class in a major way both economically and emotionally due to lower spending capability. Both taxation and inflation play a major role in the daily life of citizens.