Excise Taxes
In the USA excise taxes are imposed on particular products like the ones mentioned above, including fuel, alcohol, and tobacco, and luxury items as well. They fulfill two-fold functions i.e. both deterring overconsumption and boosting revenue. On the other hand, these measures may generate various black market clandestine actions related to heavily taxed products and can be viewed as an uneven implementation between consumption groups.
Features:
- Levied on Specific Goods: Special excise taxes are applied to the products like fuel, alcohol, cigarettes, and high-end goods.
- Purpose: They are thus created to curb spending or to finance related activities.
- Varied Rates: There is a wide range of taxation rates that is applied by a product type and jurisdiction.
Advantages:
- Promoting Public Health: VAT’s on items including cigarettes and sugary drinks are often enforced to limit their consumption.
- Revenue for Programs: They can generate revenue that can be channeled to social programs targeting the tax revenue goods e.g. healthcare or education.
- Discouraging Consumption: Taxes increase might nudge consumers from over-consuming of some items.
Disadvantages:
- Black Market Activities: Excise taxation which can result in smuggling or activities of black market for products with high rates.
- Consumer Impact: Discriminatory taxation represents a problem, specifically when it prefers consumers in lower income groups.
- Complexity in Administration: The issue on the management and enforcement of excise duties is however compounded by the fact that the rates and types of products they applied differ.
Examples: Fuel tax, alcohol tax, tobacco tax, luxury goods tax.
Types of Tax in USA: Features & Advantages
The US taxation system is regulated by the federal, state, and local governments. Each level of government levies its own unique taxation methods to fulfill its different financial obligations. The Internal Revenue Service (IRS), which has a monopoly on federal taxation, checks income taxes, while the state and local governments are the authorities that collect the sales taxes, and property taxes among other imposts specific to their areas.
Table of Content
- Types of Taxes in the USA
- 1. Income Tax
- 2. Sales Tax
- 3. Property Taxes
- 4. Payroll Taxes
- 5. Excise Taxes
- Conclusion