The city of Springvale
Types of Taxes and the Jurisdictions That Use Them
Learning Objectives
After studying this chapter, you should be able to:
1. Define the terms tax, taxpayer, incidence, and jurisdiction.
2. Express the relationship between tax base, tax rate, and tax revenue as a formula. 3. Identify and describe the types of taxes levied by local governments, state governments, and the federal government.
4. Explain why different taxing jurisdictions often compete for revenues from the same taxpayer.
5. Identify the reasons why governments continually modify their tax systems.
6. Describe the three primary sources of federal tax law.
When an explorer plans a journey through unknown territory to a new destination, his preparations include a careful inspection of a map of the territory. The explorer familiarizes himself with topographic features such as major highways, mountain ranges, lakes and rivers, and population centers. He may gather information concerning the climate of the region and the language and customs of its inhabitants. This preliminary knowledge of the environment helps the explorer chart his course and minimizes the danger that his progress will be impeded by unforeseen circumstances.
For students who are just beginning their study of taxation, the tax environment in which individuals and organizations must function is unknown territory. Chapter 1 serves as a map of this territory. The chapter begins by describing the tax environment in terms of the basic relationship among taxes, taxpayers, and governments. It identifies the major types of taxes that businesses routinely encounter and examines how governments with overlapping jurisdictions compete for tax revenues. By reading the chapter, you will gain a familiarity with the tax environment that will serve you in good stead as we journey toward an understanding of the role of taxes in the business decision-making process.
The chapter should alert you to two important features of the tax
Learning Objectives
After studying this chapter, you should be able to:
1. Define the terms tax, taxpayer, incidence, and jurisdiction.
2. Express the relationship between tax base, tax rate, and tax revenue as a formula. 3. Identify and describe the types of taxes levied by local governments, state governments, and the federal government.
4. Explain why different taxing jurisdictions often compete for revenues from the same taxpayer.
5. Identify the reasons why governments continually modify their tax systems.
6. Describe the three primary sources of federal tax law.
When an explorer plans a journey through unknown territory to a new destination, his preparations include a careful inspection of a map of the territory. The explorer familiarizes himself with topographic features such as major highways, mountain ranges, lakes and rivers, and population centers. He may gather information concerning the climate of the region and the language and customs of its inhabitants. This preliminary knowledge of the environment helps the explorer chart his course and minimizes the danger that his progress will be impeded by unforeseen circumstances.
For students who are just beginning their study of taxation, the tax environment in which individuals and organizations must function is unknown territory. Chapter 1 serves as a map of this territory. The chapter begins by describing the tax environment in terms of the basic relationship among taxes, taxpayers, and governments. It identifies the major types of taxes that businesses routinely encounter and examines how governments with overlapping jurisdictions compete for tax revenues. By reading the chapter, you will gain a familiarity with the tax environment that will serve you in good stead as we journey toward an understanding of the role of taxes in the business decision-making process.
The chapter should alert you to two important features of the tax