Understand how tax laws work, how they affect the economy, and the ways in which they can be used to achieve fiscal and social goals.

Frequently Asked Questions
  • Do nonprofit organizations pay taxes?

    Nonprofits that meet IRS criteria are exempt from federal taxes, as well as from property and sales taxes. They do pay payroll taxes and may owe taxes on activities that are not part of their nonprofit goals, such as selling products in a museum gift shop.

  • What makes Delaware a tax shelter?

    Delaware is a tax shelter because it has business-friendly usury laws and light taxation, and because companies incorporated there don’t have to conduct their business in Delaware. Delaware also has a separate court system for corporate litigation.

  • Does setting tariffs protect domestic industries?

    Tariffs are meant to protect domestic industries by putting taxes on imported products made by foreign competitors to make them cost more. They can also erode competitiveness in the protected industry.

  • Where do tax havens get revenue?

    Most governments get revenues through taxation. Tax havens, however, rely on customs and import duties, corporate registration and fees, and departure (airport) taxes on travelers.

  • How does the IRS find out that someone is cheating on their taxes?

    Computer data analysis is the key tool—using its own Information Returns Processing system, plus medical records, credit card transactions and other electronic information, including, possibly, social media postings.

  • Who has to worry about the chicken tax?

    Hint: It isn’t chickens. Or chicken farmers. The chicken tax is a 25% tariff on light truck imports originally imposed in 1963 to retaliate against European tariffs on American chicken. It still exists.

Key Terms

Explore Tax Laws

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The Purple Book
1040 Tax form surrounded by dollar bills
Tax Revenue
Tampons
Tampon Tax
Free Trade Agreement
Free Trade Agreement (FTA) Definition: How It Works, With Example
Value Added Tax
Value-Added Tax (VAT)
Shredded US one dollar bill.
Worthless Securities
Good and Services Tax
Goods and Services Tax (GST): Definition, Types, and How It's Calculated
Tax Forms, Pencil and Receipts
Regressive Tax: Definition and Types of Taxes That Are Regressive
Taxation
Taxation Defined, With Justifications and Types of Taxes
Container Cargo Ship and Cargo Plane With Working Crane Bridge in Shipyard at Sunrise
Section 232 of the Trade Expansion Act
Calculator and tax forms
Section 1250: What Is 1250 Property, Taxation, and Example
ETFs
How are ETFs Taxed?
State corporate tax rates in the United States (2017-19)
Throwback Rule Definition
Oil: A Big Investment with Big Tax Breaks
Businessmen Reading Blueprints in Empty Warehouse
How Do Tariffs Protect Domestic Industries?
Why Delaware Is Considered a Tax Shelter
Ability-to-Pay Taxation: Definition and Examples
What Double Taxation Is and How It Works
Paperwork
What Is the Tax-to-GDP Ratio? Definition, and What Is a Good One?
Senior man working in a greenhouse
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
World map
Foreign Account Tax Compliance Act (FATCA): Definition and Rules
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What Is Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)?
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How to Avoid Violating Wash Sale Rules When Realizing Tax Losses
Tax-Advantaged: Definition, Account Types, and Benefits
Last will and testament
What Is the Generation-Skipping Transfer Tax (GSTT) and Who Pays?
Ronald Reagan Giving Campaign Speech
Economic Recovery Tax Act of 1981 (ERTA)
Pump Priming Definition, Examples of Use in the U.S., Japan
What Are Common Reasons for Governments to Implement Tariffs?
16th Amendment: Definition, What Does It Do, and Importance
Surtax
How Are You Taxed After Selling a Mutual Fund in an IRA?
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IRS Publication 15-A: Employer's Supplemental Tax Guide
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Canada Revenue Agency (CRA)
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Green Levy
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Advance Corporation Tax (ACT)
Facade of a government building, Internal Revenue Service building, Washington DC, USA
Loss Disallowance Rule (LDR)
Houses, a map and a HMRC Stamp Land Duty Tax form
Stamp Duty Land Tax (SDLT)
Ten pound notes
Tax And Price Index (TPI)
Do Nonprofit Organizations Pay Taxes?
The United States Capitol
Jobs And Growth Tax Relief Reconciliation Act of 2003 (JGTRRA)
Cigarette
Tobacco Tax/Cigarette Tax
Three wood blocks spelling tax on tax forms
Protecting Americans From Tax Hikes (PATH) Act: Definition
HM Revenue and Customs (HMRC): Definition, Functions, History
Disclosure of Tax Avoidance Schemes (DOTAS)
Tax Reform Act of 1986
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Fiscal Cliff
Working With Tax Return Form
Border Adjustment Tax (BAT)
Tax Forms, Pencil, and Receipts
Tax Arbitrage
Clearance Certificate
Toronto Downtown
Canada's Harmonized Sales Tax (HST)
Master Limited Partnerships vs. Limited Partnerships
Cash dividends literally represent money sent to you in the mail or direct deposited into your bank account. The goal of successful investing is to be able to have cash dividends pour into your life regularly so you don't need to work unless you desire.
Accelerated Cost Recovery System (ACRS)
Hidden Taxes
Pick-Up Tax
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183-Day Rule: Definition, How It's Used for Residency, and Example
U.S. Capitol Building in Washington D.C.
Dynamic Scoring
Detail of Capitol Building With Red, White, and Blue Balloons
Formal Tax Legislation
oil rig pumping in the ground
Windfall Tax: Definition, Purposes, Examples
tax lien
How Does a Tax Lien Work?
Kiddie Tax

Introduction to Fiscal Policy