It is for the trader to capture the tax elements due to them, after all. We will discuss environmental taxes in a moment. Conventional sources of income taxes may be fully-tapped in many nations. Figure 2 shows the extent of income and employment taxes in a range of countries. An individual who works in Portugal can expect to give around 30 weeks in the year to the state.
Tax is, of course, primarily aimed to finance the state.
It is, however, also for two other purposes. One of these is to influence activity, which we discuss in a moment, using environmental taxes as an example of this. Second, however, it is used to transfer income from one group to another. Many taxes which are advanced because they are easy to collect such as VAT or for environmental reasons are disliked because they are not progressive , which is to say, they do not impact in a way which progresses with the income of the individual taxed. The scale of progressive taxation is illustrated by Figure 3, which shows that ten years of increased income inequality in the US has been met with a significantly lower proportional income tax burden on the low-paid majority.