Taxes are mandatory financial charges imposed by governments or governmental organizations to support common societal and agreed national needs and functions such as building and maintaining roads, schools, health care, welfare programs, and the monitoring and regulation of trade and the economy. This is done by collecting money from individuals and businesses through a variety of methods such as income taxes (scalar or progressive, often based on brackets of yearly income amounts), sales taxes, excise taxes, value-added taxes, property taxes, payroll taxes, tariffs, and estate or inheritance taxes.
In addition to raising funds for government spending, a well-implemented tax system also promotes economic efficiency through the ability of markets and private businesses to incorporate the cost of taxes into the prices they charge to customers. This can lead to increased economic growth and welfare, as shown in the diagram below.
Taxation is widely viewed as necessary by most governmental organizations to maintain a functioning society and the economy, while still allowing individuals and businesses full freedom of choice in market decisions and competition. However, many libertarians and other members of the right-wing ideological spectrum denounce taxation in its entirety as theft or extortion through coercion.
There are three main types of taxes: taxes on what you earn, taxes on what you buy, and taxes on what you own. Each of these has specific due dates and reporting requirements, which are typically based on a percentage of an exchange such as an income or sales tax or an assessment on a held item such as a property tax.