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.