A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate economic activity through measures designed to mitigate negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes
AI overview
A tax is a required payment that individuals and businesses must give to the government, which uses the money to pay for public services and infrastructure. Taxes matter because they fund essential government operations and can also be used to influence economic behavior, such as discouraging activities that harm the environment or public health.
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Article
62 sectionsContents
- Overview
- Purposes and effects
- Types
- Taxes on income, profits and capital gains
- Income tax
- Negative income tax
- Capital gains
- Corporate
- Social-security contributions
- Payroll or workforce
- Wealth
- Property
- Property taxes
- Inheritance
- Expatriation
- Remittance
- Transfer
- Wealth (net worth)
- Goods and services
- Value added
- Sales
- Excises
- Tariff
- Other
- Descriptive labels
- Ad valorem and per unit
- Consumption
- Environmental
- Proportional, progressive, regressive, and lump sum
- Direct and indirect
- Fees and effective
- History
- Trends
- Forms
- Economic effects
- Incidence
- Increased economic welfare
- Government spending
- Pigovian
- Reduced inequality
- Reduced economic welfare
- Cost of compliance
- Deadweight costs
- Perverse incentives
- In developing countries
- Key facts
- Summary
- Views
- Support
- Against
- Socialism
- Choice
- Geoism
- Theories
- Laffer curve
- Optimal
- Rates
- See also
- By country or region
- References
- Further reading
- External links
A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate economic activity through measures designed to mitigate negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent.
All countries have a tax system in place to pay for public, common societal, or agreed national needs and for the functions of government. Some countries levy a flat percentage rate of taxation on personal annual income, but most scale taxes are progressive based on brackets of yearly income amounts. Most countries charge a tax on an individual's income and corporate income. Countries or sub-units often also impose wealth taxes, inheritance taxes, gift taxes, property taxes, sales taxes, use taxes, environmental taxes, payroll taxes, duties, or tariffs. It is also possible to levy a tax on tax, as with a gross receipts tax.