Taxation

Taxation originated as a means to finance the activities of government, and that still remains its primary purpose in most of the world. However, in recent years, taxation also has been used to discourage undesirable behavior or encourage socially desirable activity. In some cases, these policies take the form of a “user fee,” in which the taxpayer is charged for specific activities, such as a charge to dump garbage in a landfill. These fees should serve as a deterrent that would discourage the activity or behavior. In addition, these fees may be designed to pay, at least in part, for the cost of the activity to the government. In other cases, a reduction in taxes is given to encourage desired activities or behavior. An example ...