TAX BASE: An item or activity that is subject to taxation. The most common tax bases are income, consumption, and wealth. The personal income tax and Social Security tax are two common taxes levied on the income base. Sales taxes are the most common taxes levied on the consumption base. Property taxes are the most common taxes levied on the wealth base.

     See also | taxes | tax rate | tax incidence | tax proportionality | personal income tax | Social Security tax | sales tax | property tax |

TAX BASE, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: April 22, 2018].

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A change in the allocation of resources caused by placing taxes on economic activity. By creating disincentives to produce, consume, or exchange, taxes generally alter resource allocations. The allocation effect is typically used when governments seek to discourage the production, consumption, or exchange of particular goods or activities that are deemed undesirable (such as tobacco use or pollution). This is one of two effects of taxation. The other (primary) is the revenue effect, which is the generation of revenue used to finance government operations.

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