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A tax is an involuntary fee paid by individuals or businesses to a government, to support the operation of that government, or to otherwise achieve government goals (also called [fiscal policy]?). Other purposes might include redistribution of income from the rich to the poor, or the support and maintenance of [public works]?. |
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A tax is an involuntary fee paid by individuals or businesses to a government, to support the operation of that government, or to otherwise achieve government goals (also called [fiscal policy]?). Other purposes might include redistribution of income from the rich to the poor, or the support and maintenance of [public works]?. Taxes are most often levied as a percentage of a certain value, called a tax rate. |
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Taxes are most often levied as a percentage of a certain value, called a tax rate. |
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An important feature of tax systems is whether they are flat(you pay one rate no matter how much you earn), regressive (the more you earn the lower the tax rate), or progressive (the more you earn the higher the tax rate). Progressive taxes generally target a smaller percentage of the income of poorer people, and require less record-keeping and complexity by people with simpler affairs. A flat tax would require the least amount of record-keeping. Progressive taxes reduce the tax burden of people with smaller incomes. |
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An important feature of tax systems is whether they are "flat" (you pay one rate no matter how much you earn), regressive (the more you earn the lower the tax rate), or progressive (the more you earn the higher the tax rate). Progressive taxes generally target a smaller percentage of the income of poorer people, and require less record-keeping and complexity by people with simpler affairs. A flat tax would require the least amount of record-keeping. Progressive taxes reduce the poverty of the working poor. |
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Another idea is to arrange the taxation so that it causes minimal economic disruption, thereby maximizing the total efficiency of the economy, and thereby making everyone wealthier. The classic economically neutral tax is a tax on land. A government's primary duty is to maintain and defend title to land, and therefore (so the theory goes) it should collect most of its revenues for this unique service. Since governments also resolve commercial disputes, especially in countries with [English Law]?, this doctrine is often used to justify a sales tax or VAT (Value Added Tax). |
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Another idea is to arrange the taxation so that it causes minimal economic disruption, thereby maximizing the total efficiency of the economy, and thereby making everyone wealthier. The classic economically neutral tax is a tax on land. A government's primary duty is to maintain and defend title to land, and therefore (so the theory goes) it should collect most of its revenues for this unique service. Since governments also resolve commercial disputes, especially in countries with [English Law]?, this doctrine is often used to justify a sales tax or VAT. The most common tax is a direct tax. [Income tax]? is paid by individuals and corporations on their earnings. This is a progressive tax, because it is adjusted to increase by income, and taxes economic activity. It distorts economies because it punishes productive people for being productive. It is socially intrusive because enforcement causes the government to collect large amounts of information about business affairs, much of which could be considered proprietary. |
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The most common tax is a direct tax. The best example of a direct tax is [income tax]?, which is paid by individuals and corporations on their earnings. This is most often a progressive tax, because it is adjusted to increase by income, and taxes economic activity. It distorts economies because it punishes productive people for being productive. It is socially intrusive because enforcement causes the government to collect large amounts of information about business affairs, much of which could be considered proprietary. |
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Indirect taxes are taxes paid while engaging in other activities, notably buying and selling. [sales tax]? is a common indirect tax. It collects a tax on retail transactions. Sales tax discourages retail sales. It is common to exempt food, heating and lighting costs from sales tax, to avoid regressive taxation on the poor. Sales tax directly discourages formation of efficient capital-intensive production because it taxes the purchase of factory equipment. The classic way of cheating on sales tax is to ask a merchant for a cash discount. The merchant pockets the cash, writes off the merchandise to shrinkage, and the state fails to get the tax. |
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Indirect taxes are taxes paid while engaging in other economic activities, notably buying and selling. [Sales tax]? is a common indirect tax. It collects a tax on retail transactions. Sales tax discourages retail sales. It is common to exempt food, heating and lighting costs from sales tax, to avoid regressive taxation on the poor. Sales tax directly discourages formation of efficient capital-intensive production because it taxes the purchase of factory equipment. The classic way of cheating on sales tax is to ask a merchant for a cash discount. The merchant pockets the cash, writes off the merchandise to shrinkage, and the state fails to get the tax. |
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A variant on sales tax is [excise tax]? which charges for the movement of goods through a border. Excise taxes discourage trade. Excises pay government to maintain a navy or border police, and also protect domestic industry to some extent. The classic cheat is smuggling, or a war to interfere with competing countries' merchants. |
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A variant on sales tax is [excise tax]? which charges for the movement of goods through a border. Excise taxes discourage trade. Excises pay government to maintain a navy or border police, and also protect domestic industry to some extent. The classic cheat is smuggling, or a war to interfere with competing countries' merchants. |
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A [gasoline tax]? is often used to pay for public transportation, especially roads and bridges. |
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A [gasoline tax]? is often used to pay for public transportation, especially roads and bridges and for the protection of the environment. |
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An [alcohol tax]? is used to discourage alcohol use. |
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An [alcohol tax]? is used to discourage alcohol consumption and to pay for the costs of treating illness caused by alcohol abuse.. |
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Other forms of taxation: *[synthetic tax]? .... <to be expanded> |
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*Scutage? *Tallage |
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*scutage? *tallage |
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see also Tax Freedom Day, Law/Tax, Taxation in the United States |
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see also Tax Freedom Day, Law/Tax, Taxation in the United States, inheritance tax |
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