Typically businesses purchase the stamps from the government, and attach them to taxed items as part of putting the items on sale, or in the case of documents, as part of filling out the form. Revenue stamps often look similar to postage stamps, and in some countries. Revenue stamps are used to collect taxes and fees. They are issued by governments and local, and by bodies of various kinds. They take many forms and may be gummed and ungummed, perforated or imperforate, printed or embossed, in many countries, they are as detailed in their design as much as banknotes, they are often made from the same type of paper. The high value of revenue stamps means that they may contain security devices to prevent counterfeiting. The Revenue Society has defined revenue stamps as, in the Ottoman empire, Damga resmi was already in use by the sixteenth century. Records of tax revenue from stamps for silk provide evidence of changes in production over time. The use of revenue stamps goes back further than that of postage stamps, Revenue stamps have become less commonly seen in the 21st century, with the rise of computerization and the ability to use numbers to track payments accurately.
There are a great many kinds of revenue stamps in the world, both national and local entities have issued them. Governments have sometimes combined the functions of postage and revenue stamps, in the former British Empire, such stamps were often inscribed Postage and Revenue to reflect their dual function. Other countries have simply allowed revenue stamps to be used for postage or vice versa, a revenue stamp authorized subsequently for postal use is known as a postal fiscal. Bhutan, for instance, authorized the use of stamps for postal purposes from 1955 until the first proper postage stamps of the country were issued in 1962. In the Stanley Gibbons catalog, this type of stamp has an F prefix, while revenue stamps often resemble postage stamps, they are not normally intended for use on mail and therefore do not receive a postal cancellation. Some countries such as Great Britain have issued stamps valid for postage and revenue, but this practice is now rare. Many different methods have used to cancel revenue stamps, including pen cancels, inked handstamps, embossing.
From around 1900, United States revenue stamps were required to be mutilated by cutting, after being affixed to documents, a class of office equipment was created to achieve this which became known as stamp mutilators. Revenue stamps were widely collected by philatelists and given the same status as postage stamps in stamp catalogues
Tax reform is the process of changing the way taxes are collected or managed by the government and is usually undertaken to improve tax administration or to provide economic or social benefits. Numerous organizations have set up to reform tax systems worldwide. Other reforms propose tax systems that attempt to deal with externalities, such reforms are sometimes proposed to be revenue-neutral, for example in revenue neutrality of the FairTax, meaning they ought not result in more tax or less being collected. Georgism claims that various forms of tax can both deal with externalities and improve productivity. Tax reform is a significant issue on the Australian political agenda. Combined annual deficits of the Commonwealth and State and territory governments will rise from 1. 9% of gross domestic product in 2011–12 to 5. 9% of GDP by 2049–50. Widespread, wholesale tax reform in Australia has not occurred since the introduction of the Goods, the Henry Tax Review identified 138 areas for significant reform to Australias tax system over the next 10 to 20 years.
In July 2013, PricewaterhouseCoopers proposed significant tax reform in the context of an ageing population, for example, over 115 other taxes raise less revenue than one tax, the Goods and Services Tax. This Report received widespread coverage in the Australian press, there have been many movements in the United States to reform the collection and management of taxes. During the late 19th century, American economist Henry George started a movement for tax reform. The aim of the movement was the abolition of all forms of other than the Single Tax on land value. The effects of the movement on taxation policy, although diminished, can be seen in parts of the world including Australia, New Zealand, Hong Kong, Taiwan. Efforts to promote this form of tax reform in the United States continue under the aegis of such as The Henry George Foundation of America. In 1986, landmark tax reform was passed in the Tax Reform Act of 1986, in the 1990s, reform proposals arose over the double-taxation of corporate income, with a large report in 1992 by the Internal Revenue Service.
During the Bush administration, the Presidents Advisory Panel for Federal Tax Reform recommended the removal of the Alternative Minimum Tax. Several organizations are working for tax reform in the United States including Americans for Tax Reform, Americans For Fair Taxation, various proposals have been put forth for tax simplification in the United States, including the FairTax and various flat tax plans and bipartisan tax reform proposals. Representative Chaka Fattah of Pennsylvania introduced a bill, H. R.4646, called the Debt Free America Act that would introduce a 1% financial transaction tax and eliminate federal income tax. He has introduced bills calling for tax reform since 2004
Tax avoidance is the legal usage of the tax regime in a single territory to ones own advantage to reduce the amount of tax that is payable by means that are within the law. Tax sheltering is very similar, although unlike tax avoidance tax sheltering is not necessarily legal, Tax havens are jurisdictions which facilitate reduced taxes. While forms of tax avoidance which use tax laws in ways not intended by governments may be considered legal, many corporations and businesses which take part in the practice experience a backlash, either from their active customers or online. Since 1995, trillions of dollars have been transferred from OECD, though the specifics may vary according to jurisdiction, these rules invalidate tax avoidance which is technically legal but not for a business purpose or in violation of the spirit of the tax code. Related terms for tax avoidance include tax planning and tax sheltering, Tax evasion, on the other hand, is the general term for efforts by individuals, corporations and other entities to evade taxes by illegal means.
Both tax evasion and some forms of tax avoidance can be viewed as forms of tax noncompliance, a company may choose to avoid taxes by establishing their company or subsidiaries in an offshore jurisdiction. Individuals may avoid tax by moving their tax residence to a tax haven, such as Monaco and they may reduce their tax by moving to a country with lower tax rates. However, a number of countries tax their citizens on their worldwide income regardless of where they reside. As of 2012, only the United States and Eritrea have such a practice, whilst Finland, Hungary, Italy, in cases such as the US, taxation cannot be avoided by simply transferring assets or moving abroad. U. S. citizens therefore cannot avoid U. S. taxes simply by emigrating from the U. S, the 2012 limit on the amount that can be excluded is US$95,100. Most countries impose taxes on income earned or gains realized within that country regardless of the country of residence of the person or firm, to avoid tax, it is usually not enough to simply move ones assets to a tax haven.
One must move to a tax haven to avoid tax. Without changing country of residence, personal taxation may be avoided by the creation of a separate legal entity to which ones property is donated. The separate legal entity is often a company, trust, or foundation and these may be located offshore, such as in the case of many private foundations. Assets are transferred to the new company or trust so that gains may be realized, or income earned, if assets are transferred back to an individual, capital gains taxes would apply on all profits. Also income tax would still be due on any salary or dividend drawn from the legal entity, for a settlor to avoid tax there may be restrictions on the type and beneficiaries of the trust. For example, the settlor of the trust may not be allowed to be a trustee or even a beneficiary, Tax results depend on definitions of legal terms which are usually vague. For example, vagueness of the distinction between business expenses and personal expenses is of concern for taxpayers and tax authorities
A tax is a financial charge or other levy imposed upon a taxpayer by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent, the legal definition and the economic definition of taxes differ in that economists do not regard many transfers to governments as taxes. For example, some transfers to the sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments, governments obtain resources by creating money and coins, through voluntary gifts, by imposing penalties, by borrowing, and by confiscating wealth. In modern taxation systems, governments levy taxes in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states, the method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics.
Tax collection is performed by a government agency such as the Canada Revenue Agency, when taxes are not fully paid, the state may impose civil penalties or criminal penalties on the non-paying entity or individual. The levying of taxes aims to raise revenue to fund governing and/or to alter prices in order to affect demand and their functional equivalents throughout history have used money provided by taxation to carry out many functions. A governments ability to raise taxes is called its fiscal capacity, when expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may be used to service past debts, governments use taxes to fund welfare and public services. These services can include education systems, pensions for the elderly, unemployment benefits, energy and waste management systems are common public utilities. A tax effectively changes relative prices of products and they have therefore sought to identify the kind of tax system that would minimize this distortion.
Governments use different kinds of taxes and vary the tax rates, taxes on the poor supported the nobility, modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working. A states tax system often reflects its communal values and the values of those in current political power. To create a system of taxation, a state must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing or administering the tax system, in countries where the public does not have a significant amount of influence over the system of taxation, that system may reflect more closely the values of those in power. All large businesses incur administrative costs in the process of delivering revenue collected from customers to the suppliers of the goods or services being purchased. Taxation is no different, the resource collected from the public through taxation is always greater than the amount which can be used by the government, the difference is called the compliance cost and includes the labour cost and other expenses incurred in complying with tax laws and rules
Theories of taxation
Several theories of taxation exist in public economics. Governments at all levels need to raise revenue from a variety of sources to finance public-sector expenditures, adam Smith in The Wealth of Nations wrote, Such things as defending the country and maintaining the institutions of good government are of general benefit to the public. Thus, it is reasonable that the population as a whole should contribute to the tax costs and they are proportionate to incomes or abilities to pay certain rather than arbitrary payable at times and in ways convenient to the taxpayers and cheap to administer and collect. In modern public-finance literature, there have two main issues, who can pay and who can benefit. Influential theories have been the ability theory presented by Arthur Cecil Pigou, there is a version of the benefit theory known as the voluntary exchange theory. Under the benefit theory, tax levels are determined, because taxpayers pay proportionately for the government benefits they receive. In other words, the individuals who benefit the most from public services pay the most taxes, two models adopting the benefit approach are discussed, the Lindahl model and the Bowen model.
DDa is the curve of taxpayer A, and DDb is the demand curve of taxpayer B. The vertical summation of the two demand curves results in the total demand schedule for state services. A and B pay different proportions of the cost of the services, when ON is the amount of state services produced, A contributes NE and B contributes NF, the cost of supply is NG. Since the state is non-profit, it increases its supply to OM, at this level, A contributes MJ and B contributes MR. Equilibrium is reached at point P on a voluntary-exchange basis, bowen’s model has more operational significance, since it demonstrates that when social goods are produced under conditions of increasing costs, the opportunity cost of private goods is foregone. For example, if there is one good and two taxpayers, their demand for social goods is represented by a and b, therefore. The supply curve is shown by a+b, indicating that goods are produced under conditions of increasing cost, the production cost of social goods is the value of foregone private goods, this means that a+b is the demand curve of private goods.
Simultaneously, the tax shares of A and B are determined by their individual demand schedules, the total tax requirement is the area out of which A is willing to pay GCEO and B is willing to pay FDEO. The advantage of the theory is the direct correlation between revenue and expenditure in a budget. It approximates market behaviour in the procedures of the public sector. Taxes are based on ability to pay, there is no quid pro quo
Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the trade, illegal currency transactions. Violations of the tax code involving income tax evasion constitutes membership in the unreported economy, because tax evasion or participation in a black market activity is illegal, participants will attempt to hide their behavior from the government or regulatory authority. Cash usage is the medium of exchange in illegal transactions since cash usage does not leave a footprint. Common motives for operating in markets are to trade contraband, avoid taxes and regulations. Typically the totality of such activity is referred to with the article as a complement to the official economies, by market for such goods and services. Black money is the proceeds of a transaction, on which income and other taxes have not been paid. Because of the nature of the black economy it is not possible to determine its size. There is no single underground economy, there are many and these underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing.
Different types of activities are distinguished according to the particular institutional rules that they violate. Illegal economy participants engage in the production and distribution of prohibited goods and services, such as trafficking, arms trafficking. The unreported economy consists of economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code. A summary measure of the economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the economy is the tax gap. In the U. S. unreported income is estimated to be $2 trillion resulting in a tax gap of $450–$500 billion, the unrecorded economy consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies. A summary measure of the economy is the amount of unrecorded income. Unrecorded income is a problem in transition countries that switched from a socialist accounting system to UN standard national accounting.
New methods have been proposed for estimating the size of the unrecorded economy, but there is still little consensus concerning the size of the unreported economies of transition countries
A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, the term can be applied to individual taxes or to a tax system as a whole, a year, multi-year, or lifetime. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with an ability to pay. The opposite of a tax is a regressive tax, where the relative tax rate or burden decreases as an individuals ability to pay increases. The term is applied in reference to personal income taxes. It can apply to adjustments of the tax base by using tax exemptions, tax credits, Progressive taxation has been positively associated with happiness, the subjective well-being of nations and citizen satisfaction with public goods, such as education and transportation. In the early days of the Roman Republic, public taxes consisted of assessments on owned wealth, the tax rate under normal circumstances was 1% of property value, and could sometimes climb as high as 3% in situations such as war.
These taxes were levied against land and other estate, animals, personal items. By 167 BC, Rome no longer needed to levy a tax against its citizens in the Italian peninsula, due to the riches acquired from conquered provinces. The first modern income tax was introduced in Britain by Prime Minister William Pitt the Younger in his budget of December 1798, to pay for weapons and equipment for the French Revolutionary War. Pitts new graduated income tax began at a levy of 2 old pence in the pound on incomes over £60, Pitt hoped that the new income tax would raise £10 million, but actual receipts for 1799 totalled just over £6 million. Pitts income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during the Peace of Amiens, Addington had taken over as prime minister in 1801, after Pitts resignation over Catholic Emancipation. The income tax was reintroduced by Addington in 1803 when hostilities recommenced, the United Kingdom income tax was reintroduced by Sir Robert Peel in the Income Tax Act 1842.
Peel, as a Conservative, had opposed income tax in the 1841 general election, the new income tax, based on Addingtons model, was imposed on incomes above £150. Although this measure was intended to be temporary, it soon became a fixture of the British taxation system. A committee was formed in 1851 under Joseph Hume to investigate the matter, despite the vociferous objection, William Gladstone, Chancellor of the Exchequer from 1852, kept the progressive income tax, and extended it to cover the costs of the Crimean War. By the 1860s, the tax had become a grudgingly accepted element of the English fiscal system. In the United States, the first progressive income tax was established by the Revenue Act of 1862 and this was signed into law by President Abraham Lincoln and repealed the flat tax, which had been brought in under the Revenue Act of 1861
Tax resistance is the refusal to pay tax because of opposition to the government that is imposing the tax, or to government policy, or as opposition to taxation in itself. Tax resistance is a form of action and, if in violation of the tax regulations. Examples of tax resistance campaigns include those advocating home rule, such as the Salt March led by Mahatma Gandhi, and those promoting womens suffrage, such as the Womens Tax Resistance League. War tax resistance is the refusal to pay some or all taxes that pay for war, Tax resisters are distinct from tax protesters, who deny that the legal obligation to pay taxes exists or applies to them. Tax resisters may accept that some law commands them to pay taxes, the earliest and most widespread forms of taxation were the corvée and tithe, both of which can be traced back to the beginning of civilization. The corvée was state-imposed forced labour on peasants too poor to pay other forms of taxation, because taxation is oppressive, governments have always struggled with tax noncompliance and resistance.
Indeed, it has suggested that tax resistance played a significant role in the collapse of several empires, including the Egyptian, Spanish. Reports of collective tax refusal include Zealots resisting the Roman poll tax during the 1st century AD, other historic events that originated as tax revolts include the Magna Carta, the American Revolution and the French Revolution. War tax resisters often highlight the relationship between tax and war. Tax resisters come from a range of backgrounds with diverse ideologies. For example, Henry David Thoreau and William Lloyd Garrison drew inspiration from the American Revolution, some tax resisters refuse to pay tax because their conscience will not allow them to fund war, whilst others resist tax as part of a campaign to overthrow the government. Some taxpayers pay their taxes, but include protest letters along with their tax forms, others pay in a protesting form — for instance, by writing their cheque on a toilet seat or a mock-up of a missile. Others pay in a way that creates inconvenience for the collector — for instance, other tax resisters change their lifestyles so that they owe less tax.
For example, UK citizens pay no income tax if their income is below the personal allowance. Opposition to war has led some, such as Ammon Hennacy and Ellen Thomas and these individuals believe that their government is engaged in immoral, unethical or destructive activities such as war, and paying taxes inevitably funds these activities. A resister may decide to reduce their tax paid through tax evasion. For instance, one way to evade tax is to only work for cash-in-hand. Some tax resisters refuse to pay all or a portion of the taxes due, in this way, they demonstrate that the intent of their resistance is not selfish and that they want to use a portion of their earnings to contribute to the common good