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Encyclopedia > Tax

"Taxes" redirects here. For the biological term, see Taxis.
Public finance
This article is part of the series:
Finance and Taxation
Taxation
Income tax  ·  Payroll tax
CGT ·  Stamp duty  ·  LVT
Sales tax  ·  VAT  ·  Flat tax
Tax, tariff and trade
Tax haven
Tax incidence
Tax rate  ·   Proportional tax
Progressive tax  ·   Regressive tax
Tax advantage
Taxation by country

Tax rates around the world
Tax revenue as % of GDP Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Comparison of tax rates around the world is a difficult and... This table lists OECD countries by total tax revenue as percentage of GDP (as of 2005). ...

Economic policy
Monetary policy
Central bank  ·   Money supply
Gold standard
Fiscal policy
Spending  ·   Deficit  ·   Debt
Policy-mix
Trade policy
Tariff  ·   Trade agreement
Finance
Financial market
Financial market participants
Corporate  ·   Personal
Public  ·   Regulation
Banking
Fractional-reserve
Full-reserve  ·   Free banking
Islamic
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A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid). A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government […] a payment exacted by legislative authority."[1] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government […] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."[1] Not to be confused with Political economy. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Monetary policy is the process by which the government, central bank... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ... For other uses, see Gold standard (disambiguation). ... Fiscal policy is the economic term that defines the set of principles and decisions of a government in setting the level of public expenditure and how that expenditure is funded. ... Government spending or government expenditure consists of government purchases, which can be financed by seigniorage (the creation of money for government funding, at a heavy price of high inflation and other possibly devastating consequences), taxes, or government borrowing. ... This article is about budget deficits. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Government debt (also known as public debt or national debt) is... This article does not cite any references or sources. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        For other uses of this word, see tariff (disambiguation). ... A trade pact is a wide ranging tax, tariff and trade pact that usually also includes investment guarantees. ... The field of finance refers to the concepts of time, money and risk and how they are interelated. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... -1... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Fractional-reserve banking refers to a financial system in which some fraction of the deposits can be used to finance profitable but illiquid investments. ... Full-reserve banking is a theoretically conceivable banking practice in which all deposits, banknotes, and notes in a financial system would be backed up by assets with a store of value. ... Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ... Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. ... Look up Levy in Wiktionary, the free dictionary. ... A juristic person is a legal fiction through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. ... For other uses, see State (disambiguation). ... Secession is the act of withdrawing from an organization, union, or political entity. ... Revolutionary, when used as a noun, is a person who either advocates or actively engages in some kind of revolution. ... Subnational entity is a generic term for an administrative region within a country — on an arbitrary level below that of the sovereign state — typically with a local government encompassing multiple municipalities, counties, or provinces with a certain degree of autonomy in a varying number of matters. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        The term direct tax has more than one meaning: a colloquial... The term indirect tax has more than one meaning. ... For other uses, see Money (disambiguation). ...


In modern taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration)[2] may be imposed on the non-paying entity or individual. For other uses, see Politics (disambiguation). ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... Example of a cheque from the Canada Revenue Agency The Canada Revenue Agency (CRA) administers: tax laws for the Government of Canada and for most provinces and territories; international trade legislation; and various social and economic benefit and incentive programs delivered through the tax system. ... Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        IRS redirects here. ... Tax rates around the world Tax revenue as % of GDP        Her Majestys Revenue and Customs (HMRC) is a non-ministerial department of the British Government primarily responsible for the collection of taxes, some forms of state support, some aspects of UK frontier protection and import controls. ... FINE was created in 1998 and is an informal association of the four main Fair Trade networks: F Fairtrade Labelling Organizations International (FLO) I International Fair Trade Association (IFAT) N Network of European Worldshops (NEWS!) and E European Fair Trade Association (EFTA) // The aim of FINE is to enable these... Search and seizure is a legal tool whereby police who suspect that a crime has been committed may do a search of the property. ... The examples and perspective in this article or section may not represent a worldwide view. ...


Tax can result in anything from the mechanisms of slavery to the fruits of re-distributive social revolution, depending on the details of its implementation.

Contents

Purposes and effects

Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and moderning states have also used cash taxes to draw or force reluctant subsistence producers into cash economies. For other uses, see Law (disambiguation). ... In urban planning, the notion of public order refers a city containing relatively empty (and orderly) spaces; which allow for flexibility in redesiging the citys layout; such perceptions played an important role in the establishments of suburbs. ... This article or section does not cite any references or sources. ... For other uses, see Road (disambiguation). ... Legal tender or forced tender is payment that cannot be refused in settlement of a debt denominated in the same currency by virtue of law. ... Look up Public works in Wiktionary, the free dictionary. ... Social engineering is a concept in political science that refers to efforts to systematically manage popular attitudes and social behavior on a large scale, whether by governments or private groups. ... ... Public services is a term usually used to mean services provided by government to its citizens, either directly (through the public sector) or by financing private provision of services. ... Education encompasses teaching and learning specific skills, and also something less tangible but more profound: the imparting of knowledge, good judgement and wisdom. ... This article or section does not adequately cite its references or sources. ... For the lodging, see Pension (lodging). ... Unemployment benefits are payments made by governments to unemployed people. ... A taxi serving as a bus Public transport comprises all transport systems in which the passengers do not travel in their own vehicles. ... LLGHHHHHHHHHK BNMNKBV JKVGKJJH JHVG KJVH KJV KJV JKV JV JV KJFYG KHV KJV gfnnnnnnnnnnhngjkv jh b ... For the company, see Waste Management, Inc. ... A public utility is a company that maintains the infrastructure for a public service. ...


Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population. Historically, the nobility were supported by taxes on the poor; modern social security systems are intended to support the poor, the disabled, or the retired by taxes on those who are still working. In addition, taxes are applied to fund foreign and military aid, to influence the macroeconomic performance of the economy (the government's strategy for doing this is called its fiscal policy - see also tax exemption), or to modify patterns of consumption or employment within an economy, by making some classes of transaction more or less attractive. In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers or corporate entities such as governments, charities or other businesses. ... Nobility is a traditional hereditary status (see hereditary titles) that exists today in many countries (mainly present or former monarchies). ... Social security primarily refers to social welfare service concerned with social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. ... Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. ... Fiscal policy is the economic term that defines the set of principles and decisions of a government in setting the level of public expenditure and how that expenditure is funded. ... A tax exemption is an exemption to the tax law of a state or nation in which part of the taxes that would normally be collected from an individual or an organization are instead foregone. ...


A nations tax system is often a reflection of its communal values or the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden — who will pay taxes and how much they will pay — and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community which the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power.


The resource collected from the public through taxation is always greater than the amount which can be used by the government. The difference is called compliance cost, and includes for example the labour cost and other expenses incurred in complying with tax laws and rules. The collection of a tax in order to spend it on a specified purpose, for example collecting a tax on alcohol to pay directly for alcoholism rehabilitation centres, is called hypothecation. This practice is often disliked by finance ministers, since it reduces their freedom of action. Some economic theorists consider the concept to be intellectually dishonest since (in reality) money is fungible. Furthermore, it often happens that taxes or excises initially levied to fund some specific government programs are then later diverted to the government general fund. In some cases, such taxes are collected in fundamentally inefficient ways, for example highway tolls. Hypothecation is a pledge of property as security for a debt without transfer of possession. ... The finance minister is a cabinet position in a government. ... Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. ...


Some economists, especially neo-classical economists, argue that all taxation creates market distortion and results in economic inefficiency. They have therefore sought to identify the kind of tax system that would minimize this distortion. Also, one of every government's most fundamental duties is to administer possession and use of land in the geographic area over which it is sovereign, and it is considered economically efficient for government to recover for public purposes the additional value it creates by providing this unique service. Neoclassical economics is the grouping of a number of schools of thought in economics. ... A market distortion is a specific type of market failure brought about by deliberate government regulation which prevents economic agents from freely establishing a clearing price. ...


Since governments also resolve commercial disputes, especially in countries with common law, similar arguments are sometimes used to justify a sales tax or value added tax. Others (e.g. libertarians) argue that most or all forms of taxes are immoral due to their involuntary (and therefore eventually coercive/violent) nature. The most extreme anti-tax view is anarcho-capitalism, in which the provision of all social services should be a matter of voluntary private contracts. This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... A sales tax is a consumption tax charged at the point of purchase for certain goods and services. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Gold standard Fiscal policy Spending   Deficit   Debt Policy-mix Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Regulation Banking Fractional-reserve Full-reserve   Free banking Islamic... This article is about the political philosophy based on private property rights. ... Anarcho-capitalism refers to an anti-statist philosophy that embraces capitalism as one of its foundational principles. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ...


The Four "R"s

Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation.[3]


The main purpose is revenue: taxes raise money to spend on roads, schools and hospitals, and on more indirect government functions like good regulation or justice systems. This is the most widely known function.[3] For the tax agency in Ireland of the same name, see Revenue Commissioners. ...


A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections, and this function is widely accepted in most democracies, although the extent to which this should happen is always controversial.[3] To meet Wikipedias quality standards, this article or section may require cleanup. ... Democracy is a form of government under which the power to alter the laws and structures of government lies, ultimately, with the citizenry. ...


A third purpose of taxation is repricing. Taxes are levied to address externalities: tobacco is taxed, for example, to discourage smoking, and many people advocate policies such as implementing a carbon tax.[3] Shredded tobacco leaf for pipe smoking Tobacco can also be pressed into plugs and sliced into flakes Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. ... A carbon tax is a tax on energy sources which emit carbon dioxide into the atmosphere. ...


A fourth, consequential effect of taxation in its historical setting has been representation.[3] The American revolutionary slogan "no taxation without representation" implied this: rulers tax citizens, and citizens demand accountability from their rulers as the other part of this bargain. Several studies have shown that direct taxation (such as income taxes) generates the greatest degree of accountability and better governance, while indirect taxation tends to have smaller effects.[4][5] In politics, representation describes how residents of a country are empowered in the government. ... The term direct tax has more than one meaning: a colloquial meaning and, in the United States, a constitutional law meaning. ... Accountability is a concept in ethics with several meanings. ... An indirect tax (such as sales tax, value added tax (VAT), or goods and services tax (GST)) is collected from the person who bears the tax by intermediaries and the proceeds passed on to government. ...


Proportional, progressive, and regressive

Main articles: Proportional tax, Progressive tax, and Regressive tax

An important feature of tax systems is the percentage of the tax burden as it relates to income or consumption. The terms progressive, regressive, and proportional are used to describe the way the rate progresses from low to high, from high to low, or proportionally. The terms describe a distribution effect, which can be applied to any type of tax system (income or consumption) that meets the definition. A progressive tax is a tax imposed so that the effective tax rate increases as the amount to which the rate is applied increases. The opposite of a progressive tax is a regressive tax, where the effective tax rate decreases as the amount to which the rate is applied increases. In between is a proportional tax, where the effective tax rate is fixed as the amount to which the rate is applied increases. The terms can also be used to apply meaning to the taxation of select consumption, such as a tax on luxury goods and the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption and decreases a tax burden on low end consumption.[6][7][8] A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion of income), as opposed to a graduated, or progressive, scheme. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A regressive tax is a tax imposed so that the tax... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... The effective tax rate is the amount of income tax an individual or firm pays divided by the individual or firms total taxable income. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A regressive tax is a tax imposed so that the tax... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion of income), as opposed to a graduated, or progressive, scheme. ...


Direct and indirect

Main articles: Direct tax and Indirect tax

Taxes are sometimes referred to as direct tax or indirect tax. The meaning of these terms can vary in different contexts, which can sometimes lead to confusion. In economics, direct taxes refer to those taxes that are collected from the people or organizations on whom they are ostensibly imposed. For example, income taxes are collected from the person who earns the income. By contrast, indirect taxes are collected from someone other than the person ostensibly responsible for paying the taxes. In law, the terms may have different meanings. In U.S. constitutional law, for instance, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership. Indirect taxes are imposed on rights, privileges, and activities. Thus, a tax on the sale of property would be considered an indirect tax, whereas the tax on simply owning the property itself would be a direct tax. The distinction can be subtle between direct and indirect taxation, but can be important under the law. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        The term direct tax has more than one meaning: a colloquial... The term indirect tax has more than one meaning. ... A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income). ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ...


Tax burden

Main article: Tax incidence
Diagram illustrating taxes effect
Diagram illustrating taxes effect

Law establishes from whom a tax is collected. In many countries, taxes are imposed on business (such as corporate taxes or portions of payroll taxes). However, who ultimately pays the tax (the tax "burden") is determined by the marketplace as taxes become embedded into production costs. Depending on how quantities supplied and demanded vary with price (the "elasticities" of supply and demand), a tax can be absorbed by the seller (in the form of lower pre-tax prices), or by the buyer (in the form of higher post-tax prices). If the elasticity of supply is low, more of the tax will be paid by the supplier. If the elasticity of demand is low, more will be paid by the customer. And contrariwise for the cases where those elasticities are high. If the seller is a competitive firm, the tax burden flows back to the factors of production depending on the elasticities thereof; this includes workers (in the form of lower wages), capital investors (in the form of loss to shareholders), landowners (in the form of lower rents) and entrepreneurs (in the form of lower wages of superintendence). First discussed by the Physiocrats in France, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. ... A diagram showing the effect of a per unit tax on the standard supply and demand diagram. ... A diagram showing the effect of a per unit tax on the standard supply and demand diagram. ... Corporate tax refers to a direct tax levied by various jurisdictions on the profits made by companies or associations. ... This article is the current Taxation Collaboration of the Month. ... Taxes and subsidies have the effect of shifting the quantity and price of goods. ... In economics, factors of production are resources used in the production of goods and services, including land, labor, and capital. ...


To illustrate this relationship, suppose the market price of a product is US$1.00, and that a $0.50 tax is imposed on the product that, by law, is to be collected from the seller. If the product is a luxury (in the economic sense of the term), a greater portion of the tax will be absorbed by the seller.[citation needed] For example, the seller might drop the price of the product to $0.70 so that, after adding in the tax, the buyer pays a total of $1.20, or $0.20 more than he did before the $0.50 tax was imposed. In this example, the buyer has paid $0.20 of the $0.50 tax (in the form of a post-tax price) and the seller has paid the remaining $0.30 (in the form of a lower pre-tax price).[9] USD redirects here. ...


Morality

According to many political views, activities funded by taxes can be beneficial to society and progressive taxation can be used in modern nation-states to the benefit of the majority of the population and social development.[10] Most arguments about taxation revolve around the degree and method of taxation and associated government spending, not taxation itself.[citation needed] Politics is the process by which decisions are made within groups. ... Young people interacting within an ethnically diverse society. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... For other meanings of development used in and outside social sciences, see development. ... Government spending or government expenditure consists of government purchases, which can be financed by seigniorage (the creation of money for government funding, at a heavy price of high inflation and other possibly devastating consequences), taxes, or government borrowing. ...


Some people, however, argue that compulsory taxation itself is inherently immoral, as it is the theft of property by the government since people are forced to pay.[11] These include objectivists[citation needed], anarcho-capitalists and classical liberals[citation needed]. Morality is a complex of principles based on cultural, religious, and philosophical concepts and beliefs, by which an individual determines whether his or her actions are right or wrong. ... Objectivism is the philosophy developed by Russian-born American philosopher and author Ayn Rand. ... Anarcho-capitalism refers to an anti-statist philosophy that embraces capitalism as one of its foundational principles. ... Classical liberalism (also known as traditional liberalism[1] and laissez-faire liberalism[2]) is a doctrine stressing the importance of human rationality, individual property rights, natural rights, the protection of civil liberties, constitutional limitations of government, free markets, and individual freedom from restraint as exemplified in the writings of Adam...


Government theft

Because payment of tax is usually compulsory and enforced by the police and justice system, some capitalist political philosophies view taxation by force as institutionalized violence equivalent to theft, accusing the government of levying taxes via coercive means. Individualist anarchists, objectivists, anarcho-capitalists, and some libertarians see taxation as government aggression (see Zero Aggression Principle). The libertarian writer Jason C. Reeher echoed the sentiments of Murray Rothbard on these grounds; in criticizing his local school district's relatively small property tax increase, Reeher said that "(t)he thief who steals the least is still a thief."[verification needed] Under this view, taxes are paid individually and therefore, to be considered voluntary, in any meaningful way, should be levied only with the consent of the individual. Some libertarians[who?] recommend a minimal level of taxation in order to maximize the protection of liberty, while others prefer market alternatives such as private defense agencies, arbitration agencies or voluntary contributions. Others claim that the examples where taxation and the state function of civil protection has collapsed and replaced by private defense agencies (such as in countries like Somalia), the results have been largely positive.[12] For other uses, see Capitalism (disambiguation). ... The Elections and Parties Series Democracy Liberal democracy History of democracy Referenda Representative democracy Representation Voting Voting systems Elections Elections by country Elections by calender Electoral systems Politics Politics by country Political campaigns Political science Political philosophy Related topics Political parties Parties by country Parties by name Parties by ideology... A young waif steals a pair of boots Stealing redirects here. ... Coercion is the practice of compelling a person to act by employing threat of force. ... Theory and practice Issues History Culture By region Lists Related Anarchism Portal Politics Portal ·        Individualist anarchism (also anarchist individualism, anarcho-individualism, individualistic anarchism) refers to any of several traditions that hold that individual conscience and the pursuit of self-interest should not be constrained by any collective body or public... This article is about the philosophy of Ayn Rand. ... Anarcho-capitalism refers to an anti-statist philosophy that embraces capitalism as one of its foundational principles. ... See also Libertarianism and Libertarian Party Libertarian,is a term for person who has made a conscious and principled commitment, evidenced by a statement or Pledge, to forswear violating others rights and usually living in voluntary communities: thus in law no longer subject to government supervision. ... The Zero Aggression Principle (or ZAP) is a personal philosophy designed to allow individuals to self-govern their interactions with other individuals. ... Murray Newton Rothbard (March 2, 1926 – January 7, 1995) was an influential American economist, historian and natural law theorist belonging to the Austrian School of Economics who helped define modern libertarianism. ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ... For other uses, see Liberty (disambiguation). ... Look up Market in Wiktionary, the free dictionary. ... A private defense agency (PDA) is a hypothetical agency that provides defense voluntarily through the free market. ... Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the arbitrators or arbitral tribunal), by whose decision (the award) they agree to be bound. ...


Democratic defense

One counter-argument is that in a democracy, because the government is the party performing the act of imposing taxes, society as a whole decides how the tax system should be organised. The American Revolution's "No taxation without representation" slogan implied this view. The same argument could be made from a monarchist perspective: since the King embodies the nation, the nation as a whole decides how the tax system should be organised. Similar arguments can be made to justify taxation under any form of government, including dictatorships and oligarchies. John Trumbulls Declaration of Independence, showing the five-man committee in charge of drafting the Declaration in 1776 as it presents its work to the Second Continental Congress in Philadelphia The American Revolution refers to the period during the last half of the 18th century in which the Thirteen... No taxation without representation was a slogan in the period 1763–1776 that summarized a primary grievance of the American colonists in the thirteen American colonies. ...


According to Ludwig von Mises, "society as a whole" should not make such decisions, due to methodological individualism.[13] Under this view, the moral stature of an act, such as enslavement or theft is not contingent upon its legality or popularity, but rather its morality. Thomas Jefferson argued that, "A direct democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine."[14] Ludwig Heinrich Edler von Mises (September 29, 1881 – October 10, 1973) (pronounced was a notable economist and a major influence on the modern libertarian movement. ... Methodological individualism is a philosophical orientation toward explaining broad society-wide developments as the accumulation of decisions by individuals. ... Slave redirects here. ... The Principle of Legality is a legal ideal that requires all law to be clear, ascertainable and non-retrospective. ... Look up popularity in Wiktionary, the free dictionary. ... Thomas Jefferson (13 April 1743 N.S.–4 July 1826) was the third President of the United States (1801–09), the principal author of the Declaration of Independence (1776), and one of the most influential Founding Fathers for his promotion of the ideals of Republicanism in the United States. ... For other uses, see Direct. ... Ochlocracy (Greek: οχλοκρατια; Latin: ochlocratia) is government by mob or a mass of people, or the intimidation of constitutional authorities. ...


Land Tax defense

Advocates of land value taxation argue that sovereign rights over the products of labour and capital do not apply to land. John Locke wrote in Essay on Civil Government (1690) that: "When the sacredness of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property." Henry George elaborated this to claim: "Here are two simple principles, both of which are self-evident: I.—That all men have equal rights to the use and enjoyment of the elements provided by Nature. II.—That each man has an exclusive right to the use and enjoyment of what is produced by his own labor" (Protection or Free Trade, 1886). Land Value Taxation (LVT) is the policy of raising state revenues by charging each landholder a portion of the assessed site-only value of the unimproved land. ... For other persons named John Locke, see John Locke (disambiguation). ... Henry George Henry George (September 2, 1839 – October 29, 1897) was an American political economist and the most influential proponent of the Single Tax on land. ...


Justification

Defenders of taxation argue that taxation of business is justified on the grounds that the commercial activity necessarily involves use of publicly established and maintained economic infrastructure, and that businesses are in effect charged for this use.[citation needed] Compulsory taxation of individuals, such as income tax, is argued to be justified on similar grounds, including territorial sovereignty, and the social contract. A libertarian response is that government services used by people are either already paid for directly or are services that ought to be provided by a free market. Such taxes, they argue, are a way for the rulers to exploit the people. In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers or corporate entities such as governments, charities or other businesses. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        An income tax is a tax levied on the financial income... “Sovereign” redirects here. ... John Lockes writings on the Social Contract were particularly influential among the American Founding Fathers. ...


History

Taxation levels

Egyptian peasants seized for non-payment of taxes. (Pyramid Age)
Egyptian peasants seized for non-payment of taxes. (Pyramid Age)

The first known system of taxation was in Ancient Egypt around 3000 BC - 2800 BC in the first dynasty of the Old Kingdom.[15] Records from the time document that the pharaoh would conduct a biennial tour of the kingdom, collecting tax revenues from the people. Early taxation is also described in the Bible. In Genesis (chapter 47, verse 24 - the New International Version), it states "But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children." Joseph was telling the people of Egypt how to divide their crop, providing a portion to the Pharaoh. A share (20%) of the crop was the tax. Image File history File links Size of this preview: 800 × 304 pixelsFull resolution (1248 × 474 pixel, file size: 20 KB, MIME type: image/png) File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... Image File history File links Size of this preview: 800 × 304 pixelsFull resolution (1248 × 474 pixel, file size: 20 KB, MIME type: image/png) File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... The pyramids are the most recognizable symbols of the civilization of ancient Egypt. ... // Ceremonial temple butcher knife made of flint, with the Horus name of the pharaoh Djer inscribed on its gold handle. ... For other uses, see Bible (disambiguation). ... For other uses, see Genesis (disambiguation). ... The New International Version (NIV) is an English translation of the Christian Bible which is the most popular of the modern translations of the Bible made in the twentieth century. ... For other uses, see Pharaoh (disambiguation). ... Joseph interprets the dream of the Pharaoh. ...


In India, Islamic rulers imposed jizya starting in the 11th century. It was abolished by Akbar. Quite a few records of government tax collection in Europe since at least the 17th century are still available today. But taxation levels are hard to compare to the size and flow of the economy since production numbers are not as readily available. Government expenditures and revenue in France during the 17th century went from about 24.30 million livres in 1600-10 to about 126.86 million livres in 1650-59 to about 117.99 million livres in 1700-10 when government debt had reached 1.6 billion livres. In 1780-89 it reached 421.50 million livres. [16] Taxation as a percentage of production of final goods may have reached 15% - 20% during the 17th century in places like France, the Netherlands, and Scandinavia. During the war-filled years of the eighteenth and early nineteenth century, tax rates in Europe increased dramatically as war became more expensive and governments became more centralized and adept at gathering taxes. This increase was greatest in England, Peter Mathias and Patrick O'Brien found that the tax burden increased by 85% over this period. Another study confirmed this number, finding that per capita tax revenues had grown almost sixfold over the eighteenth century, but that steady economic growth had made the real burden on each individual only double over this period before the industrial revolution. Average tax rates were higher in Britain than France the years before the French Revolution, twice in per capita income comparison, but they were mostly placed on international trade. In France, taxes were lower but the burden was mainly on landowners, individuals, and internal trade and thus created far more resentment.[17] In states ruled by Islamic law, jizya or jizyah (Arabic: جزْية; Ottoman Turkish: cizye) is a per capita tax imposed on able bodied non-Muslim men of military age. ... This article needs additional references or sources for verification. ... The livre tournois (or Tournoise pound) was a currency used in France, named after the town of Tours, in which it was minted. ... For other uses, see Scandinavia (disambiguation). ... Patrick OBrien is an economic historian. ... The effective tax rate is the amount of income tax an individual or firm pays divided by the individual or firms total taxable income. ... The French Revolution (1789–1815) was a period of political and social upheaval in the political history of France and Europe as a whole, during which the French governmental structure, previously an absolute monarchy with feudal privileges for the aristocracy and Catholic clergy, underwent radical change to forms based on...


Taxation as a percentage of GDP in 2003 was 56.1% in Denmark, 54.5% in France, 49.0% in the Euro area, 42.6% in the United Kingdom, 35.7% in the United States, 35.2% in The Republic of Ireland, and among all OECD members an average of 40.7%.[18][19] For other uses, see Euro (disambiguation). ...


Forms of taxation

In monetary economies prior to fiat banking, a critical form of taxation was seigniorage, the tax on the creation of money. Seigniorage, also spelled seignorage or seigneurage, is the net revenue derived from the issuing of currency. ...


Other obsolete forms of taxation include:

  • Scutage - paid in lieu of military service; strictly speaking a commutation of a non-tax obligation rather than a tax as such, but functioning as a tax in practice
  • Tallage - a tax on feudal dependents
  • Tithe - a tax-like payment (one tenth of one's earnings or agricultural produce), paid to the Church (and thus too specific to be a tax in strict technical terms). This should not be confused with the modern practice of the same name which is normally voluntary, although churches have sought it forcefully at times.
  • Aids - During feudal times a feudal aid was a type of tax or due paid by a vassal to his lord.
  • Danegeld - medieval land tax originally raised to pay off raiding Danes and later used to fund military expenditures.
  • Carucage - tax which replaced the danegeld in England.
  • Tax Farming - the principle of assigning the responsibility for tax revenue collection to private citizens or groups.

Some principalities taxed windows, doors, or cabinets to reduce consumption of imported glass and hardware. Armoires, hutches, and wardrobes were employed to evade taxes on doors and cabinets. In extraordinary circumstances, taxes are also used to enforce public policy like congestion charge (to cut road traffic and encourage public transport) in London. In Tsarist Russia, taxes were clamped on beards. Today, one of the most complicated taxation-systems worldwide is in Germany. Three quarters of the world's taxation-literature refers to the German system. There are 118 laws, 185 forms, and 96,000 regulations, spending €3.7 billion to collect the income tax. Today, governments of advanced economies of EU, North America, and others rely more on direct taxes, while those of developing economies of India, Africa, and others rely more on indirect taxes. The tax of scutage or escuage in the law of England involved the pecuniary commutation, under the feudal system, of the military service due from the holder of a knights fee. ... Tallage or talliage (from the French a part cut out of the whole) appears to have signified at first a tax in general, but became afterwards confined in England to a special form of tax: the assessment upon cities, boroughs, and royal domains. ... A tithe (from Old English teogoþa tenth) is a one-tenth part of something, paid as a (usually) voluntary contribution or as a tax or levy, usually to support a Jewish or Christian religious organization. ... The Danegeld was an English tribute raised to pay off Viking raiders (usually led by the Danish king) to save the land from being ravaged by the raiders. ... Tax farming was originally a Roman practise whereby the burden of tax collection was removed from the Roman State to private individuals or groups. ... For other uses, see Euro (disambiguation). ...


Tax rates

Main article: Tax rate

Taxes are most often levied as a percentage, called the tax rate. An important distinction when talking about tax rates is to distinguish between the marginal rate and the effective (average) rate. The effective rate is the total tax paid divided by the total amount the tax is paid on, while the marginal rate is the rate paid on the next dollar of income earned. For example, if income is taxed on a formula of 5% from $0 up to $50,000, 10% from $50,000 to $100,000, and 15% over $100,000, a taxpayer with income of $175,000 would pay a total of $18,750 in taxes. A tax (also known as a dutyor Zakat in islamic economics) is a charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ...

Tax calculation
((0.05*50,000) + (0.10*50,000) + (0.15*75,000)) = 18,750
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