Tax is a mandatory financial charge or levy imposed by a government entity on individuals or businesses to collectively fund government spending, public expenditures, or as a way to regulate and reduce negative externalities. The main objective of a tax is to raise revenue, which distinguishes them from fees and fines. Fees are levied to offset the cost of providing a service, while fines are imposed to penalize an unlawful or harmful act. Taxes come under many different names, including assessment, duty, tariff, customs, capitation, levy, and impost/imposition.
There are different types of taxes, including income tax, corporate tax, sales tax, property tax, and tariff. Income tax is applied to some form of money received by a taxpayer, such as income earned from salary, capital gains from investment appreciation, dividends or interest received as additional income, payments made for goods and services, and so on. Corporate tax is a percentage of corporate profits taken as tax by the government to fund federal programs. Sales tax is levied on certain goods and services and varies by jurisdiction. Property tax is based on the value of land and property assets. Tariff is a tax on imported goods imposed with the aim of strengthening domestic businesses.
Taxation has been a mainstay of civilization since ancient times, and tax systems have varied considerably across jurisdictions and time. The formulation of tax policies is one of the most critical and contentious issues in modern politics. The IRS is a government agency that enforces tax laws and collects federal taxes in the United States.
