Taxes

Taxes are compulsory charges imposed by governments on individuals and organizations to fund public goods and services and to influence behavior and economic activity. They are collected at multiple levels of government and through various instruments, with types including income taxes on wages and profits, payroll taxes, corporate taxes, and consumption taxes such as value-added tax or sales taxes, as well as property taxes and excises. Tax systems define the tax base, the rate structure, exemptions, credits, and thresholds, and determine how the burden is distributed among different groups. Tax burden can fall on individuals, households, businesses, and end consumers, and its incidence may differ from the statutory liability.

Policy goals vary but commonly include revenue for public goods, redistribution to enhance equity, stabilization of the economy, and incentives for desired behavior. Tax design seeks to balance efficiency and equity, minimize avoidance and complexity, and maintain competitiveness. Practical considerations include administration, compliance costs, and the incentive effects on work, saving, investment, and consumption.

Administration typically relies on self-assessment or withholding, audits, and enforcement to ensure compliance. International aspects increasingly influence national tax policies, with agreements on transfer pricing, anti-avoidance measures, and tax treaties; value-added taxation is widespread globally, while some jurisdictions rely more on income or consumption taxes.

Tax policy remains a frequent subject of political debate, reflecting trade-offs between raising revenue, reducing inequality, and fostering growth, as well as concerns about fairness, transparency, and competitiveness.