Tax
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 and reduce negative externalities.
From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector, levied on a basis of predetermined criteria and without reference to specific benefits received.
[10] The levying of taxes aims to raise revenue to fund governing, to alter prices in order to affect demand, or to regulate some form of cost or benefit.
According to this view, the purpose of taxation is to maintain the stability of the currency, express public policy regarding the distribution of wealth, subsidizing certain industries or population groups or isolating the costs of certain benefits, such as highways or social security.
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.
Excise duties were first introduced into England in the year 1643, as part of a scheme of revenue and taxation devised by parliamentarian John Pym and approved by the Long Parliament.
These duties consisted of charges on beer, ale, cider, cherry wine, and tobacco, to which list were afterward added paper, soap, candles, malt, hops, and sweets.
In addition, the supply of people is in fact not fixed over time: on average, couples will choose to have fewer children if a poll tax is imposed.
[37] In Hattusa, the capital of the Hittite Empire, grains were collected as a tax from the surrounding lands, and stored in silos as a display of the king's wealth.
For instance, Babylon was assessed for the highest amount and for a startling mixture of commodities; 1,000 silver talents and four months supply of food for the army.
[41] The Rosetta Stone, a tax concession issued by Ptolemy V in 196 BC and written in three languages "led to the most famous decipherment in history—the cracking of hieroglyphics".
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.
Effective tax rates were higher in Britain than France in the years before the French Revolution, twice in per capita income comparison, but they were mostly placed on international trade.
Other obsolete forms of taxation include: Some principalities taxed windows, doors, or cabinets to reduce consumption of imported glass and hardware.
Adam Smith writes in The Wealth of Nations that The side-effects of taxation (such as economic distortions) and theories about how best to tax are an important subject in microeconomics.
The greatest share of the tax burden tends to fall on the most inelastic factor involved—the part of the transaction which is affected least by a change in price.
[56] Pigovian taxes might target the undesirable production of greenhouse gases which cause climate change (namely a carbon tax), polluting fuels (such as petrol), water or air pollution (namely an ecotax), goods which incur public healthcare costs (such as alcohol or tobacco), and excess demand of certain public goods (such as traffic congestion pricing).
[citation needed] Although governments must spend money on tax collection activities, some of the costs, particularly for keeping records and filling out forms, are borne by businesses and by private individuals.
[64] Researchers for EPS PEAKS[65] stated that the core purpose of taxation is revenue mobilization, providing resources for National Budgets, and forming an important part of macroeconomic management.
They said economic theory has focused on the need to "optimize" the system through balancing efficiency and equity, understanding the impacts on production, and consumption as well as distribution, redistribution, and welfare.
This suggests countries making the most progress replacing aid with tax revenue tend to be those benefiting disproportionately from rising prices of energy and commodities.
In high-income countries, the highest tax-to-GDP ratio is in Denmark at 47% and the lowest is in Kuwait at 0.8%, reflecting low taxes from strong oil revenues.
The long-term average performance of tax revenue as a share of GDP in low-income countries has been largely stagnant, although most have shown some improvement in more recent years.
[65] The author of the Economics Topic Guide found that the best aid modalities for revenue depend on country circumstances, but should aim to align with government interests and facilitate effective planning and implementation of activities under evidence-based tax reform.
For traditional conservatives, the payment of taxation is justified as part of the general obligations of citizens to obey the law and support established institutions.
[96] Murray Rothbard argued in The Ethics of Liberty in 1982 that taxation is theft and that tax resistance is therefore legitimate: "Just as no one is morally required to answer a robber truthfully when he asks if there are any valuables in one's house, so no one can be morally required to answer truthfully similar questions asked by the state, e.g., when filling out income tax returns.
In the United States, President George W. Bush proposed in his 2009 budget "to terminate or reduce 151 discretionary programs" which were inefficient or ineffective.
[109] Demand for specific land is dependent on nature, but even more so on the presence of communities, trade, and government infrastructure, particularly in urban environments.
Therefore, under the assumed principle of equal rights of all people to natural resources, the occupier of any such land must compensate the rest of society to the amount of that value.
Some economists sought to integrate optimal tax theory with the social welfare function, which is the economic expression of the idea that equality is valuable to a greater or lesser extent.
