What Are Taxes?

Taxes are mandatory fees, so learn more about what they are and how to file for them here.

Defining Taxes

If you’ve ever earned income, bought something, or made a gain on an investment, for example, you’ve been taxed. Everyone from individual shoppers to multinational corporations have to pay taxes at some point.

Taxes are mandatory fees that governments collect. 

These fees come from local, regional, and national governments, and make up part of the budget used to run those governments and what they do (see the next slide for some examples).

Taxes are compulsory, meaning if you don’t pay them, or “evade” your taxes, you can get into legal trouble with the Internal Revenue Service (IRS).

What are Taxes Used For?

As mentioned, taxes are used to run governments and what they do. This includes:

• Funding public services, like schools and police departments
• Social funding, like welfare, unemployment benefits, social security, Medicaid, etc.
• Infrastructure, like roads, public parks, transportation systems, etc.
• National defense, intelligence, and federal law enforcement
• And more

This means that the taxes you pay are meant to better the country you live in.