Difference between revisions of "Taxation"

Revision as of 17:52, September 18, 2008

Taxation is how governments obtain money in order to provide services required for the common good.

There are many kinds of taxes, just as there are many things that are (or are not) considered to be in the common good.

Taxes can include:

• Tariffs on imported or exported goods and services
• Property taxes on the value of one's real estate holdings
• Sales taxes on marketplace transactions
  • (The preceding three are examples of ad valorem taxes)
• Income taxes on money that is earned
• Estate taxes on inheritances
• Poll taxes required in order to vote
• Rooms and meals taxes, charged on restaurant and hotel purchases
• "Sin taxes" which are applied to socially disapproved products such as tobacco and alcohol
• Pigovian taxes are applied to correct negative externalities
• Tolls are fees paid by users of a specific piece of infrastructure, like a road or bridge
• Value added tax is charged to manufacturers on the increase in value from raw materials to finished product (and of course passed along to consumers of the product)

Most systems of taxation not only use a combination of several of these, but have many exceptions (and loopholes) from universal application - for instance, a sales tax might not apply to food or clothing.

Rates of taxation and the provision of some services can be matters of great political contention.

In the United States, the Democrat party generally favors higher income taxes to pay for government social programs, whereas the Republican party trusts the people with their own money and favors smaller government and lower taxes.

See Also

Government services