Taxation
Definition
Taxation is the process by which governments collect compulsory payments from individuals and businesses to fund public services and operations. Taxes can be progressive (higher rates for higher incomes), regressive (taking a larger percentage from lower incomes), or proportional (flat rate for all).
Examples
- The federal income tax, authorized by the 16th Amendment (1913), uses progressive tax brackets
- Sales tax is considered regressive because it takes a larger percentage of income from lower-income earners
- Property taxes are the primary funding source for most local public school systems
Key Fact
The 16th Amendment (1913) gave Congress the power to levy a federal income tax.
Study This Concept
Practice taxation with free review games in these units: