Taxation is a term for when a taxing authority, usually a government, levies or imposes a financial obligation on its citizens or residents. Paying taxes to governments or officials has been a mainstay of civilization since ancient times.
The term "taxation" applies to all types of involuntary levies, from income to capital gains to estate taxes. Though taxation can be a noun or verb, it is usually referred to as an act; the resulting revenue is usually called "taxes."
KEY TAKEAWAYS
- Taxation occurs when a government or other authority requires that a fee be paid by citizens and corporations, to that authority.
- The fee is involuntary, and as opposed to other payments, not linked to any specific services that have been or will be provided.
- Tax occurs on physical assets, including property and transactions, such as a sale of stock, or a home.
- Types of taxes include income, corporate, capital gains, property, inheritance, and sales.
