Q:

What is taxation?

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Quick Answer

Taxation is when governments require citizens to pay a certain amount of money to help fund public institutions. Taxes are used to pay for things like public education, welfare programs, transportation infrastructure, defense funds and libraries.

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What is taxation?
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Many countries employ a progressive tax system, which requires that people with more income pay a higher percentage of taxes than people with less income. The U.S. tax system is a progressive system. Taxes are also used to incentivize certain behaviors; for instance, taxes in the United States are reduced when someone gives to a charity. Tax credits may also be given for things like education, green appliances and cars and even mortgage interest.

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Related Questions

  • Q:

    What are the principles of taxation?

    A:

    According to John Stuart Mill, the four principles of taxation are that the system be efficient, understandable and equitable and those who benefit from publicly-provided services should sponsor and pay for those services through taxes. A good tax system follows the four principles of taxation.

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  • Q:

    What are some of the different types of tariffs?

    A:

    Import and export tariffs, which can be either ad valorem or non-ad valorem, are some of the ways that governments alter international trade to their advantage and regulate their economies. Ad valorem tariffs, which impose a customs duty on the value of a product or commodity, are the most common. Non-ad valorem tariffs are based on physical quantities and can be specific, mixed or compound.

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  • Q:

    What is the benefits received principle of taxation?

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    The benefits received principle of taxation asserts that people and businesses who receive the benefit of a good or service financed by taxes should pay the tax it requires. The ability to pay principle is the opposite of the benefits received principle.

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  • Q:

    What do I need to bring with me to the Department of Taxation?

    A:

    The materials needed for a visit to a Department of Taxation vary by state. Most audits require detailed income and expense records, such as sales and purchase invoices.

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