tax
Definition
A fee charged ("levied") by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. Since public goods and services do not allow a non-payer to be excluded, or allow exclusion by a consumer, there cannot be a market in the good or service, and so they need to be provided by the government or a quasi-government agency, which tend to finance themselves largely through taxes.
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Related Terms
Abusive Tax Shelter, Accumulated Earnings Tax, ad valorem, after-tax, After-Tax Contributions, Alternative Minimum Tax, back taxes, before-tax income, pre-tax profit margin, capital gains tax, consolidated tax return, EBIT, effective tax rate, equivalent taxable yield, estate tax, estimated tax, excess profits tax, excise tax, Federal tax lien, flat tax, franchise tax, gift tax, hidden tax, income tax, inheritance tax, luxury tax, non-resident alien tax, PITI, progressive tax, provision for income taxes, regressive tax, sales tax, self-employment tax, sin tax, Social Security Tax, surtax, tariff, levy, transfer tax, Unified Tax Credit, Value Added Tax, deferred tax
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