taxation

Taxation is the imposition of compulsory levies on individuals or entities by governments in almost every country of the world. Taxation is used primarily to raise revenue for government expenditures, though it can serve other purposes as well.

In modern economies, taxes are the most important source of governmental revenue. However, taxation is not a government's only source of revenue. Taxes differ from other sources of revenue in that they are compulsory levies and are unrequited (except payroll taxes)—i.e., they are generally not paid in exchange for some specific thing.

A direct tax is a type of taxation of an individual that is typically based on the individual’s ability to pay as measured by income, consumption, or net wealth.

An indirect tax is a type of taxation levied on the production or consumption of goods and services or on transactions.

Value-added tax (VAT) is a type of indirect taxation levied by a government on the amount that a business adds to the price of a commodity during production and distribution of a good. VAT is collected through the credit method, which recognizes and adjusts for the taxes paid on previously purchased inputs.

Whether U.S. churches should remain tax-exempt is hotly debated. Some argue the exemption is constitutional and maintains a long American tradition. Others argue the exemption is unconstitutional and forces taxpayers to subsidize religion. For more on the church taxation debate, visit ProCon.org.

Whether the federal corporate income tax should be raised is debated. Some argue a raise would make taxes fairer and force companies to invest in the United States, rather than overseas. Others say a raise would lower wages and increase costs for everyday people and weaken the economy. For more on the debate about raising the corporate income tax rate, visit ProCon.org.