Ad valorem tax

Following the common terminology, a distinction lot of taxes (English: specific taxes ) and value-added taxes ( eng.: ad valorem taxes ).

A value added tax is a tax on the price of the goods under consideration or the value of a transaction and not on the quantity purchased. Value-added taxes are levied as a percentage of premiums or discounts of sales, income or customs value. If an estate, for example, with a sales tax rate of τ (pronounced tau) charged, resulting in a consumer price of value added taxes have the advantage that they grow with the inflation- rate of money sizes. This is not the case with the amount of taxes. To compensate for the inflation rate so no tax increases are necessary, which are difficult to explain by the policy. Therefore, the major taxes are value added taxes today.

With progressive taxes the resources described effect is even more pronounced. Thus, the legislator can even announce " tax cuts ", in which he returns only those revenues that have been taken in the previous years by the cold progression.

A distinction is gross value added tax and net worth tax. While gross value added tax, the tax is deducted from the tax base, with net worth taxes, the tax is added to the tax base. The sales tax is a net of value added tax and in Germany is currently 19%. This corresponds to a gross value added tax in the amount of approximately 15.97%. A tax rate of 19% on the net value thus corresponds to a tax rate of 15.97 % of the gross value. In contrast, the income tax is one group of gross value added taxes. The conversion rate between gross value added tax and net worth tax, the formula is:

• Taxes and duties