Taxes

Definition

Taxes refer to compulsory payments imposed by governments on individuals or businesses based on their income or consumption. They serve as a major source of government revenue and can impact economic behavior.

Related terms

Progressive Taxation: Progressive taxation is a system where tax rates increase with higher levels of income. This means that individuals with higher incomes pay a larger percentage of their earnings in taxes.

Regressive Taxation: Regressive taxation is a system where tax rates decrease with higher levels of income. In this case, individuals with lower incomes end up paying a larger proportion of their earnings in taxes.

Flat Tax: A flat tax is a system where all individuals or businesses pay the same tax rate, regardless of their income level. It simplifies the tax structure but may impact lower-income individuals more heavily.