Tax facts for kids

A tax form

Tax is money that people have to pay to the government.

The government uses the money it gets from taxes to pay for things. For example, taxes are used to pay for people who work for the government, such as the military and police, provide services such as education and health care, and to maintain or build things like roads, bridges and sewers.

Types of taxes

There are many different kinds of taxes. They may be direct tax or indirect tax.

• Taxes that are based on how much money a company earns are called corporate taxes
• Taxes that are based on how much money a person earns are called income taxes.

• Taxes that are based on how much a person buys are called sales taxes.
• Taxes that are based on how much a person owns are called a property taxes. Things like houses have a property tax on them.
• Taxes that are paid when official document are approved are called stamp duties (because in the past the document would have a stamp put on it). Changing who owns a house will often need a document approving.
• Taxes that are paid when somebody dies are called inheritance or estate taxes.

Taxes can also be split into 3 groups:

• Flat taxes: Everybody pays the same percentage. Russia has a flat income tax and everybody in Russia has to pay 13% of the income.
• Progressive taxes: The more money a person makes, the higher percentage of their income they have to pay. Most countries have progressive income taxes.
• Regressive taxes: The less money a person makes, the higher percentage of their income they have to pay. Sales taxes are usually called regressive as poor people spend a higher percentage of their money, than rich people.

Paying lots of different taxes

Often because different parts of governments use taxes for different things, people end up paying lots of taxes.

In the United States, for example, the national government has an income tax; most states have an income tax or a sales tax, or both; and cities and towns may have a sales tax or a property tax. In some states such as Ohio, the sales tax is different in each county.

Before Taxes

In ancient times, people from one city or area would attack another place, and make the people there pay tribute. Tribute meant that the attacked people would pay money (or other things), and the attacker would stop attacking them. A famous tribute was the Danegeld, when people from Denmark conquered part of England and made the English pay thousands of silver coins.

Groups who are against taxes

Anarchists and Libertarians are against all taxes or against high taxes. As people are paying them unwillingly and under the threat of sanctions, they say that taxation is the same as robbery.

Images for kids

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  Total revenue from direct and indirect taxes given as share of GDP in 2017

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  Pieter Brueghel the Younger, The tax collector's office, 1640

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  Substitution effect and income effect with a taxation on y good.

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  Budget's constraint shift after an introduction of a lump sum tax or a general tax on consumption or a proportional income tax.

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  Egyptian peasants seized for non-payment of taxes. (Pyramid Age)

See also

In Spanish: Impuesto para niños