Taxation
Taxation
Taxation (/tækˈseɪʃən/) is the means by which governments finance their expenditure by imposing charges on citizens and corporate entities.
Etymology
The term 'taxation' comes from the Latin word 'taxatio' which means 'a valuing, an appraisal'.
Definition
Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs. See Economic Effects of Taxation.
Types of Taxation
There are several types of taxation, which include but are not limited to:
- Income Tax: A tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income).
- Sales Tax: A tax paid to a governing body for the sales of certain goods and services.
- Property Tax: A levy on property that the owner is required to pay, with rates set as a percentage of the home value.
- Inheritance Tax: Taxes imposed on individuals who inherit assets from a deceased person.
Related Terms
- Tax Evasion: The illegal evasion of taxes by individuals, corporations, and trusts.
- Tax Avoidance: The legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable by means that are within the law.
- Tax Relief: Reductions in the amount of tax that an individual or business must pay.
- Tax Refund: A payment to the taxpayer when the taxpayer pays more tax than they owe.
External links
- Medical encyclopedia article on Taxation
- Wikipedia's article - Taxation
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