Tax

Taxation, or tax for short, is the amount taken by a government as a percentage of either an individual's income or of a company's profits. Whilst it may be unpopular with people to see a large slice of the money they have earned being taken from them, the revenue from taxes is used in part to pay for public services such as roads, sewers, education, welfare and national defence.

Tax is usually a controversial and political item. Not only can it make or break governments and challengers at election time depending on their taxation policies, but it has also been a sore point recently amongst the general public who see claims in the media that large multinational corporations are paying little or no tax to the country despite having significant operations within it. The whole areas of tax avoidance and tax evasion are controversial and divide opinion, not to mention creating well-paid jobs for many as tax specialists have become an entire industry with companies and wealthy individuals willing to pay handsomely for tax advice which could save them much more in not having to pay out earnings as tax. Some countries are particularly attractive as bases for residency due to their low rates of tax such as Monaco and the Cayman Islands.

The amount of tax due is usually calculated as a percentage of earnings, which means the amount owed by a person or a business will vary. Most countries have tax bands and brackets, tax-free amounts and tax-free savings accounts, as well as rules about offsetting losses and so forth. Ultimately, tax can be a complicated issue, which is another reason why tax and financial advisers are in so much demand.