A fixed tax is a
lump sum
A lump sum is a single payment of money, as opposed to a series of payments made over time (such as an annuity).
The United States Department of Housing and Urban Development distinguishes between " price analysis" and "cost analysis" by whether ...
tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
that is not measured as a
percentage of the tax base (income, wealth, or consumption). Fixed taxes like a
poll tax or
sin tax
A sin tax is an excise tax specifically levied on certain goods deemed harmful to society and individuals, such as alcohol, tobacco, drugs, candies, soft drinks, fast foods, coffee, sugar, gambling, and pornography. In contrast to Pigovian ta ...
are often considered
regressive, but could have
progressive effects if applied to
luxury goods and
services
Service may refer to:
Activities
* Administrative service, a required part of the workload of university faculty
* Civil service, the body of employees of a government
* Community service, volunteer service for the benefit of a community or a p ...
.
Since
citizens share common
roads
A road is a linear way for the conveyance of traffic that mostly has an improved surface for use by vehicles (motorized and non-motorized) and pedestrians. Unlike streets, the main function of roads is transportation.
There are many types of ...
,
military
A military, also known collectively as armed forces, is a heavily armed, highly organized force primarily intended for warfare. It is typically authorized and maintained by a sovereign state, with its members identifiable by their distinct ...
protection,
policing, and other
government services, some argue that citizens should pay the same amount for basic
infrastructure. Fixed taxation removes the
moral dilemma of two individuals having to pay significantly different amounts in order to receive the same services, which could be argued as
discrimination against economic success.
It is argued that a fixed tax can save on tax compliance costs and improves
privacy. Unlike
proportional taxes, a fixed tax does not necessitate public insight, i.e.
governments
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
would not need to know individual
income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. Fo ...
,
wealth
Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an I ...
, or
consumption
Consumption may refer to:
*Resource consumption
*Tuberculosis, an infectious disease, historically
* Consumption (ecology), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of newly produced goods for curren ...
.
However, when applied as a precondition of membership in
society
A society is a group of individuals involved in persistent social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. Soci ...
or on products bought by the poor, it functions as a potentially extreme regressive tax in that it doesn't consider a person's ability to pay unless further adjustments are made (e.g. the way that the
Australian
HECS
Tertiary education fees in Australia are payable for courses at tertiary education institutions. The Commonwealth government provides loans and subsidies to relieve the cost of tertiary education for some students. Some students are supported ...
system applies tertiary education charges from a fixed schedule, but defers payments according to people's ability to pay by piggybacking payments as a progressively based surcharge on
income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
). This can result in the lower income taxpayers paying much higher proportions of their incomes on taxes, incomes that are less disposable in that they must also pay a larger percentage of their incomes on necessities. Because of this, fixed taxes are better suited to funding governments which are not responsible for providing very much for the citizens and therefore do not have much to pay for.
Personal taxes
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