Legislators have three needs in mind as they prepare tax laws- -the need to raise revenue, the need to be fair to taxpayers, and the need to influence taxpayers’ behavior. Below are three excise taxes that have affected the economy and consumers’ behaviors. All are direct taxes.
A sin tax is used to discourage the use of products and services that could pose a risk to someone’s health, such as alcohol and cigarettes. Puritan colonists used the earliest sin taxes in this country.
The gasoline excise tax is a user tax on gasoline purchases. People who use gasoline pay taxes on it. These revenues maintain and build roads and highways and regulate underground pollution related to gas storage. Urban area mass transportation is developed and maintained by gas tax revenue.
Luxury taxes are taxes on expensive, nonessential items, such as luxury cars. Revenue from luxury taxes is redistributed through government programs that benefit all citizens.
Original Post By: Michael DeBlis