Sometimes, sales tax will only apply to the value of the item at the time it is being sold to the end consumer. Other times, the tax will apply each time the product is transfered as it travels through its supply chain. It also applies to any service that is being supplied at any stage of the supply chain. An example of this type of tax is the European VAT, or Value Added Tax. As the name suggest, the tax relates to the amount of value created at each stage in the supply chain. This works through giving a credit for the amount of this tax paid by an organisation for inputs. For example, if the organisation paid $10 for inputs (such as on services and raw materials) and the tax rate was 10% they would have had to pay $11 for the inputs, $10 for the raw material and services and a $1 tax. If they then sell the item for $15, they would collect $1.50 from the purchaser as a tax. The organisation would have to remit $0.50 as a tax to the government as they would get a $1 credit for the tax they paid on the inputs.

Tax law is a branch of law that encompasses a number of different matters regarding how the state taxes citizens and so forth. What is interesting about tax law is how complex it is. The complexity arises as the state uses tax law as a means of social engineering. In other words, the state uses tax law to encourage certain behavior and to discourage certain other behavior.

Further, each level of government has its own revenue requirements and its own social agenda.

Taxes arise at the federal, state and local levels. Taxes are usually based on some activity or circumstance. These include in respect to net worth (wealth tax), the ownership of a home (property tax), the earning of income (income tax), the sale of property (capital gains tax), the purchase of goods or services (sales tax), switching homes (land transfer tax), movement (fuel surcharges), the storing of information (blank media tax), the transporation of goods (import taxes), the giving of goods and services (gift taxes), dying (succession tax) and having fun (sin tax on alcohol, for instance). Merely being in conflict with the state can give rise to tax (expropriation). Some jurisdictions have taxes that arise merely if one is alive, a head or capitation tax (while often behind a tax is a social agenda to reduce a particular activity, such as the case with sin taxes, we are sure that is not the case with this tax!!).

As well, taxes can depend on legal status, such as being an individual, a corporation or having a family (the additional tax burden that arises if the family decides to raise the children itself).