Taxation

Extracted Attributes

• Major Types

  Direct (income, corporate, wealth) and Indirect (sales, VAT, excise)

• Tax Structures

  Progressive, Proportional, and Regressive

• US Legal Basis

  Sixteenth Amendment (1913) for federal income tax

• Primary Purpose

  Raising revenue for government expenditures and regulating negative externalities

• Economic Function

  Transfers wealth from households and businesses to the government

• First Recorded Instance

  3000–2800 BC in Ancient Egypt

Timeline

• Earliest known taxation recorded in Ancient Egypt. (Source: Wikipedia)

  3000-01-01

• The Sixteenth Amendment to the U.S. Constitution is ratified, allowing for federal income tax. (Source: Investopedia)

  1913-02-03

• All-In Podcast Episode 172 critiques Joe Biden's $7.3 trillion 2025 budget proposal for pushing the limits of taxation. (Source: Document 2f015cc5-e1ee-43bb-82eb-95b492d89ea8)

  2024-03-28

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. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent. All countries have a tax system in place to pay for public, common societal, or agreed national needs and for the functions of government. Some countries levy a flat percentage rate of taxation on personal annual income, but most scale taxes are progressive based on brackets of yearly income amounts. Most countries charge a tax on an individual's income and corporate income. Countries or sub-units often also impose wealth taxes, inheritance taxes, gift taxes, property taxes, sales taxes, use taxes, environmental taxes, payroll taxes, duties, or tariffs. It is also possible to levy a tax on tax, as with a gross receipts tax. In economic terms (circular flow of income), taxation transfers wealth from households or businesses to the government. This affects economic growth and welfare, which can be increased (known as fiscal multiplier) or decreased (known as excess burden of taxation). Consequently, taxation is a highly debated topic by some, as although taxation is deemed necessary by consensus for society to function and grow in an orderly and equitable manner through the government provision of public goods and public services, others such as libertarians are anti-taxation and denounce taxation broadly or in its entirety, classifying taxation as theft or extortion through coercion along with the use of force. Within market economies, taxation is considered the most viable option to operate the government (instead of widespread state ownership of the means of production), as taxation enables the government to generate revenue without heavily interfering with the market and private businesses; taxation preserves the efficiency and productivity of the private sector by allowing individuals and companies to make their own economic decisions, engage in flexible production, competition, and innovation as a result of market forces. Certain countries (usually small in size or population, which results in a smaller infrastructure and social expenditure) function as tax havens by imposing minimal taxes on the personal income of individuals and corporate income. These tax havens attract capital from abroad (particularly from larger economies) while resulting in loss of tax revenues within other non-haven countries (through base erosion and profit shifting).

Web Search Results

• Understanding Taxation: Definitions, Justifications, and Types

  ## What Is Taxation? Taxation refers to the compulsory levies imposed by governments on their citizens. These levies have existed since ancient times, serving as a fundamental mechanism to fund public services and infrastructure. They encompass various types, such as income, capital gains, and estate taxes. While "taxation" can be a noun or verb, it primarily denotes the act of imposing these financial obligations, with the objective of generating revenue for governmental expenditure. [...] Taxation involves a government-imposed financial obligation on citizens and has been fundamental to societal structures since ancient times. Taxes can be levied on various entities, ranging from individual income and capital gains to specific products and activities such as tobacco purchases or casino winnings. Initially, the U.S. government relied on user fees and asset sales for revenue until the federal implementation of income tax following the Sixteenth Amendment in 1913. [...] ## Understanding Taxation Taxation differs from other payments, like market exchanges, as it does not require consent and isn't directly linked to services provided. Governments enforce taxation through either implied or direct threats of force. Taxation is legally different than extortion or a protection racket because the imposing institution is a government, not private actors.

• TAXATION Definition & Meaning - Merriam-Webster

  tax·​a·​tion tak-ˈsā-shən") : the action of taxing especially : the imposition of taxes 2 : revenue obtained from taxes 3 : the amount assessed as a tax ## Examples of taxation in a Sentence the federal right of taxation Recent Examples on the Web Examples are automatically compiled from online sources to show current usage. Read More Opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback. [...] “Taxation.” Merriam-Webster.com Dictionary, Merriam-Webster, Accessed 29 Dec. 2025. Copy Citation ## Share ## Kids Definition taxation noun tax·​a·​tion tak-ˈsā-shən") : the action of taxing especially : the establishing of taxes ## Legal Definition taxation noun tax·​a·​tion 1 : the action of taxing: as a : the imposition of taxes b : the judicial determination of costs 2 a : revenue obtained from taxes b : the amount assessed as a tax 3 [...] : a particular system of taxing progressive taxation ## More from Merriam-Webster on taxation Nglish: Translation of taxation for Spanish Speakers Britannica.com: Encyclopedia article about taxation Last Updated: - Updated example sentences Love words? Need even more definitions? Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! Merriam-Webster unabridged ## More from Merriam-Webster ### Can you solve 4 words at once?

• Taxation | Definition, Purpose, Importance, & Types | Britannica Money

  Courtesy of the Scottish National Portrait Gallery, Edinburgh Key People: : Kangxi : Diocletian : Vespasian : Jean-Baptiste Colbert : Warren Hastings Top Questions ### What is taxation? Taxation is the imposition of compulsory levies on individuals or entities by governments in almost every country of the world. Taxation is used primarily to raise revenue for government expenditures, though it can serve other purposes as well. ### How does taxation relate to government revenue? [...] In modern economies taxes are the most important source of governmental revenue. Taxes differ from other sources of revenue in that they are compulsory levies and are unrequited—i.e., they are generally not paid in exchange for some specific thing, such as a particular public service, the sale of public property, or the issuance of public debt. While taxes are presumably collected for the welfare of taxpayers as a whole, the individual taxpayer’s liability is independent of any specific benefit [...] A direct tax is a type of taxation of an individual that is typically based on the individual’s ability to pay as measured by income, consumption, or net wealth. taxation, imposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well.

• Taxation - OECD

  OECD Login on your MyOECD account # Taxation Taxation is central to building strong, prosperous and inclusive societies by helping to raise the revenues needed to deliver much needed public goods and services. The OECD produces internationally comparable tax data, analysis and policy advice with the aim of helping governments around the world to design and implement effective, fair and efficient tax systems to foster resilient, inclusive and sustainable growth over the long term. [...] Effective taxation is vital for development. An effective tax system not only raises revenues needed for funding public services, but can also support development goals, for example by helping combat illicit financial flows, reducing inequality through redistribution and addressing health and environmental objectives by influencing taxpayer behaviour. Learn more Tax and the environment [...] Learn more Tax administration The role of tax administrations is to collect the revenue that helps to pay for public spending by governments. This might include support for education, welfare, pensions, health services, transport infrastructure and defence, among many other areas. To maintain public confidence, tax systems must be seen to be fair, efficient and effective, an area where international co-operation between administrations can play an important role.

• Regressive vs. Proportional vs. Progressive Taxes

  Taxes can also be classified as indirect or direct taxes. Indirect taxes such as some excise taxes are incurred by a manufacturer or supplier and then passed on to consumers. They're tacked on to what a consumer pays for a given product. Income taxes are direct taxes. They're not passed on and the taxpayer is liable for them. [...] Tax systems in the U.S. fall into three categories: regressive, proportional, or progressive. Regressive and progressive taxes impact high- and low-income earners differently but proportional taxes don't. Property taxes are an example of a regressive tax. The U.S. federal income tax is progressive. Occupational taxes are a type of proportional tax. [...] Regressive tax systems are thought to be disproportionately burdensome on low-income earners because they levy the same percentage on purchased products or goods regardless of the buyer's income. A proportional tax applies the same tax rate to all individuals regardless of their incomes. A progressive tax imposes a greater percentage of taxation on higher income levels on the theory that high-income earners can afford to pay more.