Taxes

Definition

Taxes are costs imposed by state and local government bodies as a revenue basis, charged for the sale and/or use of goods and services. They are typically added as a percentage to the total cost of goods and/or services.

Purpose

Taxes are essential for funding government operations and public services, including infrastructure, education, healthcare, and public safety. They are a primary source of revenue for state and local governments.

Examples of Use

1. Sales Tax: Applied to the sale of goods and services, collected at the point of purchase and remitted to the government.
2. Property Tax: Charged on real estate ownership, based on the property's assessed value, and used to fund local services like schools and emergency services.
3. Income Tax: Levied on individual and corporate earnings, used to fund a wide range of public programs and services.

Related Terms

• Excise Tax: A tax on specific goods, such as fuel, alcohol, and tobacco.
• Value-Added Tax (VAT): A consumption tax placed on a product whenever value is added at each stage of the supply chain.
• Tariff: A tax imposed on imported goods and services.

Notes

• Compliance: Businesses and individuals must comply with tax laws by accurately reporting income and sales, and remitting taxes due.
• Exemptions and Deductions: Various exemptions and deductions may reduce the overall tax liability for qualifying entities and individuals.