Hidden Taxes

AAA

DEFINITION of 'Hidden Taxes'

Taxes that are indirectly assessed upon consumer goods without the consumer's knowledge. Hidden taxes are levied upon the goods at some point during the production process and therefore raise the cost of the goods sold. However, this tax is never revealed directly to the consumer, who simply pays a higher price for the good, not knowing that part of that price is due to this tax.

BREAKING DOWN 'Hidden Taxes'

Some ad valorem taxes are an example of a hidden tax, as are taxes that are imposed at the wholesale level. Most consumers are aware that there is a tax on retail goods (sales tax), but this is by no means the only tax levied on consumer goods. Hidden taxes are almost invariably passed on to the consumer.

RELATED TERMS
  1. Stealth Taxes

    A type of levy that governments use to increase their revenues ...
  2. Taxes

    An involuntary fee levied on corporations or individuals that ...
  3. Duty

    1. A tax levied on certain goods, services or transactions. Duties ...
  4. Value-Added Tax - VAT

    A type of consumption tax that is placed on a product whenever ...
  5. Sales Tax

    A tax imposed by the government at the point of sale on retail ...
  6. Ad Valorem Tax

    A tax based on the assessed value of real estate or personal ...
Related Articles
  1. Insurance

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
  2. Taxes

    Don't Put Off Your Year-End Tax Plan

    From sales tax deductions to credit reports, check out what items should be on your financial checklist.
  3. Economics

    NAFTA's Winners And Losers

    Read on to find out who this free-trade agreement helped, and who it hurt.
  4. Insurance

    10 Reasons Why Moving Might Not Make You Richer

    Find out why moving to a less expensive city may not reduce your expenses.
  5. Taxes

    What IRS Form 990 Tells About a Nonprofit

    Want a picture of an organization's activities? This annual form, open to the public, sums up everything from salaries paid to missions accomplished.
  6. Retirement

    The 3 Most Common 401k Rollover Mistakes

    No one is born knowing the tax rules for 401(k)s and IRAs, but only dummies, scaredy cats and suckers don't buckle down to learn them.
  7. Taxes

    Top Reasons to File Separately When Married

    Most of the time, it makes sense for couples to file their taxes jointly. Except for these possible exceptions...
  8. Taxes

    What IRS Form 1023 Is Used For

    To be treated as a tax-exempt organization, start by filling out this form.
  9. Taxes

    Late with Your Taxes? Grab IRS Form 4868

    Fill out this form to get a few more months to file your tax return. But remember, April 15 is still the payment due date if you owe taxes.
  10. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
RELATED FAQS
  1. What are some examples of a value added tax?

    A value-added tax (VAT) is a consumption tax levied on products at every point of sale where value has been added, starting ... Read Full Answer >>
  2. What are some of the arguments for and against a Value Added Tax (VAT)?

    A value-added tax (VAT) is a type of consumption tax placed on a product whenever value is added at a stage of production ... Read Full Answer >>
  3. Can I use my IRA savings to start my own savings?

    While there is no legal reason why you cannot withdraw funds from your IRA to start a traditional savings account, it is ... Read Full Answer >>
  4. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  5. What is the Social Security tax rate?

    The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the ... Read Full Answer >>
  6. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!