Tax

Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

Though the actual definitions vary between jurisdictions, in general, a direct tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax.

In modern taxation systems, governments levy taxes in money; but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents.

As such it represents a form of levy (taxation).

These services can include education systems, pensions for the elderly, unemployment benefits, and public transportation.

Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons.

If we consider, for instance, two normal goods, x and y, whose prices are respectively p x and p y and an individual budget constraint given by the equation xp x + yp y = Y, where Y is the income, the slope of the budget constraint, in a graph where is represented good x on the vertical axis and good y on the horizontal axes, is equal to -p y /p x . The initial equilibrium is in the point (C), in which budget constraint and indifference curve are tangent, introducing an ad valorem tax on the y good (budget constraint: p x x + p y (1 + τ)y = Y), the budget constraint's slope becomes equal to -p y (1 + τ)/p x . The new equilibrium is now in the tangent point (A) with a lower indifferent curve.

An ad valorem tax (Latin for "according to value") is a tax whose amount is based on the value of a transaction or of property.

The Laffer curve depicts the amount of government revenue as a function of rates of taxation.

In economics, the Laffer curve illustrates a theoretical relationship between rates of taxation and the resulting levels of government revenue.

A government's ability to raise taxes is called its fiscal capacity.

In economics and political science, fiscal capacity may be referred to as tax capacity, extractive capacity or the power to tax, as taxes are a main source of public revenues.

Another example can be the Introduction of an income lump-sum tax (xp x + yp y = Y - T), with a parallel shift downward of the budget constraint, can be produced a higher revenue with the same loss of consumers' utility compared with the property tax case, from another point of view, the same revenue can be produced with a lower utility sacrifice.

A lump-sum tax is a special way of taxation, based on a fixed amount, rather than on the real circumstance of the taxed entity.

According to the proponents of the chartalist theory of money creation, taxes are not needed for government revenue, as long as the government in question is able to issue fiat money.

In macroeconomics, chartalism is a theory of money which argues that money originated with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt, and that fiat currency has value in exchange because of sovereign power to levy taxes on economic activity payable in the currency they issue.

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.

A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally, based on the increase in value of a product or service at each stage of production or distribution.

In addition, taxes are applied to fund foreign aid and military ventures, to influence the macroeconomic performance of the economy (a 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 and political science, fiscal policy is the use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy.

The most extreme anti-tax view, anarcho-capitalism, holds that all social services should be voluntarily bought by the person(s) using them.

In an anarcho-capitalist society, law enforcement, courts and all other security services would be operated by privately funded competitors selected by consumers rather than centrally through confiscatory taxation.

Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST), excise, tariff) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).

The incidence of taxation varies by system, and some systems may be viewed as progressive or regressive.

A regressive tax is a tax imposed in such a manner that the average tax rate (tax paid ÷ personal income) decreases as the amount subject to taxation increases.

The incidence of taxation varies by system, and some systems may be viewed as progressive or regressive.

A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases.

Many jurisdictions impose estate tax, gift tax or other inheritance taxes on property at death or at the time of gift transfer.

An inheritance or estate tax is a tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has died.

Some jurisdictions impose taxes on financial or capital transactions.

A financial transaction tax is a levy on a specific type of financial transaction for a particular purpose.

Computation of income subject to tax may be determined under accounting principles used in the jurisdiction, which may be modified or replaced by tax-law principles in the jurisdiction.

Tax law or revenue law is an area of legal study which deals with the constitutional, common-law, statutory, tax treaty, and regulatory rules that constitute the law applicable to taxation.

These corrections take one of two forms: payments to the government, for taxpayers who have not paid enough during the tax year; and tax refunds from the government to those who have overpaid.

A tax refund or tax rebate is a refund on taxes when the tax liability is less than the taxes paid.

When taxes are not fully paid, the state may impose civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration) on the non-paying entity or individual.

Fines can also be used as a form of tax.

Tax collection is performed by a government agency such as the Ghana Revenue Authority, Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, Her Majesty's Revenue and Customs (HMRC) in the United Kingdom or Federal Tax Service in Russia.

The Ghana Revenue Authority (GRA) is the Ghana administration charged with the task of assessing, collecting and accounting for tax revenue in Ghana.

Some of these include expenditures on economic infrastructure (roads, public transportation, sanitation, legal systems, public safety, education, health-care systems), military, scientific research, culture and the arts, public works, distribution, data collection and dissemination, public insurance, and the operation of government itself.

1) general taxation to the state, county or municipality

A carbon tax is a tax on the consumption of carbon-based non-renewable fuels, such as petrol, diesel-fuel, jet fuels, and natural gas.

A carbon tax is a tax levied on the carbon content of fuels.

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.

The hypothecation of a tax (also known as the ring-fencing or earmarking of a tax) is the dedication of the revenue from a specific tax for a particular expenditure purpose.

Historically, taxes on the poor supported the nobility; modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working.

The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widowed persons, and the disabled.

Many tax authorities have introduced automated VAT which has increased accountability and auditability, by utilizing computer-systems, thereby also enabling anti-cybercrime offices as well.

Due to strong incentives (including taxation, misselling and other forms of fraud) to misstate financial information, auditing has become a legal requirement for many entities who have the power to exploit financial information for personal gain.