Answered: Why do government entities impose taxes…

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Economics

Why do government entities impose taxes and how is the type of taxation chosen (e.g., excise v. income v. sales taxes)?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 3.11P

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Question

Why do government entities impose taxes and how is the type of taxation chosen (e.g., excise v. income v. sales taxes)?

Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.

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Step 1: Defining Taxation.

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Step 2: Reasons for Tax Imposition.

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Step 3: Choosing the Type of Taxation.

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