Taxation
Taxation is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. The study of Taxation is a core component of Public-Finance and Macroeconomics. Historically, systems of Taxation have existed since Ancient-Egypt, where the pharaohs collected a portion of the harvest.
Economic Principles
Economists such as Adam-Smith have long debated the most efficient ways to collect revenue. In his seminal work, The-Wealth-of-Nations, he proposed four 'canons' of Taxation. These principles are still referenced by modern global bodies like the OECD and the International-Monetary-Fund to guide Fiscal-Policy. Effective tax collection is also a focus of the World-Bank for developing nations.
Common Tax Categories
Most modern economies rely on a mix of the following:
- Income-Tax: A tax on the earnings of individuals and entities.
- Corporate-Tax: A levy on the profits of businesses.
- Value-Added-Tax: A consumption tax added at each stage of production.
- Capital-Gains-Tax: A tax on the profit from the sale of non-inventory assets.
The balance between these taxes can significantly influence Economic-Growth and Income-Redistribution.