Tax law, administration, and policy are essential elements in public finance. In most countries, the production of revenues through taxation is the principal means of financing government activities. Even governments that borrow substantially to cover budgetary deficits are required in the long run to find revenues to service such debt.

Legislators and officials have devised many forms of taxation that are in use in the United States and other countries. They include income taxes, wealth transfer taxes, consumption taxes, property taxes, import duties, excise taxes, and transfer taxes and fees. The decision as to which devices to use depend on several basic factors:

  • the financial needs of the government,
  • the sectors of the economy intended to bear the burden, or incidence, of the tax,
  • the possibility of using tax ...
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