Sales, Property and Value added tax
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Sales taxes are a form of excise levied when a commodity is sold to
its final consumer. Retail organizations contend that such taxes
discourage retail sales. The question of whether they are generally
progressive or regressive is a subject of much current debate.
People with higher incomes spend a lower proportion of them, so a
flat-rate sales tax will tend to be regressive. It is therefore
common to exempt food, utilities and other necessities from sales
taxes, since poor people spend a higher proportion of their incomes
on these commodities, so such exemptions would make the tax more
progressive. This is the classic "You pay for what you spend" tax,
as only those who spend money on non-exempt (i.e. luxury) items pay
the tax.
A small number of US states rely entirely on sales taxes for state
revenue, as those states do not levy a state income tax. Such states
tend to have a moderate to large amount of tourism or inter-state
travel that occurs within their borders, allowing the state to
benefit from taxes from people the state would otherwise not tax. In
this way, the state is able to reduce the tax burden on its
citizens.
The US states that do not levy a state income tax are Alaska,
Florida, Nevada, South Dakota, Texas, Washington state, and Wyoming.
Additionally, New Hampshire and Tennessee only levy state income
taxes on dividends and interest income. Of the above states, only
Alaska and New Hampshire do not levy a state sales tax. Additional
information can be obtained at the Federation of Tax Administrators
website.
The sales tax has come into national attention with the growing
movement for a "FairTax" federal tax system, which is, in all
reality, simply a national retail sales tax. That subject is covered
more in depth in the Wikipedia entry "FairTax".
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Tariffs
An import or export tariff (also called customs duty or impost) is a charge
for the movement of goods through a political border. Tariffs discourage trade,
and they may be used by governments to protect domestic industries. A proportion
of tariff revenues is often hypothecated to pay government to maintain a navy or
border police. The classic way of cheating a tariff is smuggling. Property
taxes
A property tax is usually levied on the value of property owned,
usually real estate. Property taxes may be charged on a recurrent
basis, or upon a certain event.
A common type of property tax is an annual charge on the ownership
of real estate, where the tax base is the supposed value of the
property. For a period of over 150 years from 1695 a window tax was
levied in England, with the result that you can still see listed
buildings with windows bricked up in order to save their owner's
money. A similar tax existed in France, with similar results.
The two most common type of event driven property taxes are stamp
duty, charged upon change of ownership, and inheritance tax, which
is imposed in many countries on the estates of the deceased.
In contrast with a tax on real estate, a land value tax is levied
only on the unimproved value of the land ("land" in this instance
meaning the economic term, i.e., all natural resources). Land tax
has long been recognized as the only tax which does not distort
market relations. Some political economists claim that because land
is not the product of labor it should be the only tax.
When real estate is held by a higher government unit or some other
entity not subject to taxation by the local government, the taxing
authority may receive a payment in lieu of taxes to compensate it
for some or all of the foregone tax revenue. |
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