Tax Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Tax, written in plain English, along with examples of how it is used.

What is Tax?

A charge by the government on the citizen of the country or on their property or a charge on certain activities for their welfare. It is also charged on certain business activities like bringing in goods interstate or inter country, on sales, on licences, on purchases and is also known as government charges on ones income and assets.

History and Meaning of Tax

Taxation has been present in human societies since the beginning of civilization, and the concept of a centralized government has been interlinked with the idea of taxation. The civilizations of ancient Egypt, Rome, and Greece all had unique forms of taxation systems, with the purpose typically being to support the military or the ruling class. In modern times, taxes serve a wide range of purposes including funding public infrastructure, social welfare programs, and education, among others.

In legal terms, a tax is a financial charge by the government on individuals, businesses, or property. Taxes are mandatory payments levied on citizens or businesses to support the government's activities and responsibilities. There are a variety of types of taxes levied in the United States, including income tax, property tax, sales tax, and capital gains tax.

Examples of Tax

  1. A person purchasing a new product from a store is required to pay a sales tax on the purchase price.
  2. An individual or business in the US is required to file and pay income tax to the federal and state governments every year.
  3. Property owners are required to pay property tax on the value of land, buildings, or other structures they own.
  4. An international business conducting trades with the US may be required to pay tariffs or import taxes on the goods they bring into the country.
  5. Certain activities such as gambling or tobacco consumption in some states may be subject to additional taxes known as "sin taxes."

Legal Terms Similar to Tax

  1. Tariff - a tax charged by a government on goods imported or exported from the country.
  2. Levy - a legally imposed tax or fee.
  3. Duty - a tax on imports or exports of goods.