Hidden tax
Encyclopedia
A hidden tax is a tax
that is not visible to the taxpayer. These taxes can raise prices of goods and lower salaries for workers. Hidden taxes, although hidden, can decrease the purchasing power
of individuals significantly.
Many kinds of tax behave like hidden taxes:
Corporate income tax: Because of this tax, shareholders and employees get less dividend
s and salary
.
Tariffs or import taxes: It lowers competition by raising the price of imports and products produced outside.
Sin tax
es: Taxes on alcohol and cigarettes are highly regressive.
Travel taxes:
Utilities taxes: According to a 1998 study, taxes take up 48% of the price of gasoline.
Inflation tax
: It is a regressive hidden tax.
Financial repression
: A range of measures which governments can employ to reduce their debt, which are often accompanied by inflation.
Profits from government-owned corporation
s: Especially when a government-owned corporation enjoys a legally protected monopoly and records excessive profits, such profits may be criticized as hidden taxation. Governments in some jurisdictions directly own utilities (making such profits related to utility taxes) and some monopolize the alcohol trade (making such profits related to sin taxes).
, Calendar Year 2004
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Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
that is not visible to the taxpayer. These taxes can raise prices of goods and lower salaries for workers. Hidden taxes, although hidden, can decrease the purchasing power
Purchasing power
Purchasing power is the number of goods/services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing...
of individuals significantly.
Many kinds of tax behave like hidden taxes:
Corporate income tax: Because of this tax, shareholders and employees get less dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
s and salary
Salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
.
Tariffs or import taxes: It lowers competition by raising the price of imports and products produced outside.
Sin tax
Sin tax
A sin tax is a kind of sumptuary tax: a tax specifically levied on certain generally socially proscribed goods and services. These goods are usually alcohol and tobacco, but also include candies, soft drinks, fat foods and coffee, while services range from prostitution to...
es: Taxes on alcohol and cigarettes are highly regressive.
Travel taxes:
Utilities taxes: According to a 1998 study, taxes take up 48% of the price of gasoline.
Inflation tax
Inflation tax
Inflation tax is a term which refers to the financial loss of value suffered by holders of cash and fixed-rate bonds, as well those on fixed income , due to the effects of inflation...
: It is a regressive hidden tax.
Financial repression
Financial repression
Financial repression is a term used to describe several measures which governments employ to channel funds to themselves which in a deregulated market would go elsewhere. Financial repression can be particularly effective at liquidating debt....
: A range of measures which governments can employ to reduce their debt, which are often accompanied by inflation.
Profits from government-owned corporation
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
s: Especially when a government-owned corporation enjoys a legally protected monopoly and records excessive profits, such profits may be criticized as hidden taxation. Governments in some jurisdictions directly own utilities (making such profits related to utility taxes) and some monopolize the alcohol trade (making such profits related to sin taxes).
United States
A study by the Institute for Policy Innovation suggested that hidden taxes account $2,462 per capita.Hidden tax
Quintiles of Household Cash Money Income according to the Tax FoundationTax Foundation
The Tax Foundation is a Washington, D.C.-based think tank founded in 1937 that collects data and publishes research studies on tax policies at the federal and state levels. The organization is broken into three primary areas of research which are the Center for Federal Fiscal Policy, The and the...
, Calendar Year 2004
| Bottom 20 Percent |
Second 20 Percent |
Third 20 Percent |
Fourth 20 Percent |
Top 20 |
|
| Total Federal Taxes |
38.9% |
55.7% |
61.5% |
64.4% |
70.2% |
| Income |
4.0% |
12.0% |
17.6% |
22.6% |
35.7% |
| Payroll |
21.2% |
30.6% |
32.0% |
30.4% |
22.5% |
| Corporate Income |
6.3% |
8.4% |
8.2% |
8.2% |
8.1% |
| Gasoline |
1.6% |
1.2% |
1.0% |
0.8% |
0.6% |
| Alcoholic Beverages |
0.8% |
0.4% |
0.4% |
0.3% |
0.2% |
| Tobacco |
1.2% |
0.6% |
0.3% |
0.2% |
0.1% |
| Diesel Fuel |
0.2% |
0.3% |
0.3% |
0.3% |
0.3% |
| Air Transport |
0.5% |
0.4% |
0.4% |
0.4% |
0.4% |
| Other Excise |
1.0% |
0.6% |
0.4% |
0.4% |
0.2% |
| Customs, Duties, etc. |
2.2% |
1.2% |
0.9% |
0.8% |
0.5% |
| Estate & Gift |
0.0% |
0.0% |
0.0% |
0.0% |
1.7% |