Tax

A tax is the compulsory financial charge or some other type of levy imposed on a taxpayer an individual or legal entity by a governmental agency in outline to fund government spending as well as various public expenditures regional, local, or national, in addition to tax compliance subject to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the adjustment time and securing the correct tax allowances and tax reliefs. The number one known taxation took place in Ancient Egypt around 3000–2800 BC. A failure to pay in a timely classification non-compliance, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

Most countries produce a tax system in place, in lines to pay for public, common, or agreed national needs and for the functions of government. Some levy a flat percentage rate of taxation on personal annual income, but nearly scale taxes are progressive based on brackets of annual income amounts. nearly countries charge a tax on an individual's income as living as on corporate income. Countries or subunits often also impose wealth taxes, inheritance taxes, estate taxes, gift taxes, property taxes, sales taxes, use taxes, payroll taxes, duties and/or tariffs.

In economic terms, taxation transfers wealth from households or businesses to the government. This has effects that can both add and reduce economic growth and economic welfare. Consequently, taxation is a highly debated topic.

Overview

The legal definition and the economic definition of taxes differ in some ways such that economists make not regard numerous transfers to governments as taxes. For example, some transfers to the public sector are comparable to prices. Examples add tuition at public universities and fees for utilities present by local governments. Governments also obtain resources by "creating" money and coins for example, by printing bills and by minting coins, through voluntary gifts for example, contributions to public universities and museums, by imposing penalties such(a) as traffic fines, by borrowing and confiscating criminal proceeds. From the picture 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 consultation to specific benefits received.

In modern taxation systems, governments levy taxes in money; but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the Internal Revenue Service IRS in the United States, Her Majesty's Revenue and Customs HMRC in the United Kingdom, the Canada Revenue Agency or the Australian Taxation Office. When taxes are non fully paid, the state may impose civil penalties such as fines or forfeiture or criminal penalties such as incarceration on the non-paying entity or individual.