Wordology, Tarriff

Basically, a tariff is a tax levied by governments to control the flow of products across borders and making foreign manufacturers’ products more expensive. The purpose is to increase demand for domestic products while reducing the volume of imports. Tariff charges can be fixed price or a percentage of the transaction price.

In the United States tariffs, also called duties or levies are collected by Customs and Border Protection agents at 328 ports of entry across the country.

Importers pay more for products by paying the tax on top of the product cost. They pass along the increased costs to businesses, which pass along the higher costs to shoppers.

Because a tariff is a tax, the government receives increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.

Friday Tax Advice

Getting Off Scot Free

Many think these words have some vague reference to Scottish people. It actually does not. In the thirteenth century, scot was the word for money you would pay at a tavern for food and drinks. It was also used when they passed the hat to pay an entertainer.

Later, it came to mean a local tax that paid the sheriff’s expenses. To go scot-free literally meant to be exempted from paying this tax.

German Sex Meters

The German city of Bonn is calling its policy of levying a surcharge on streetwalking prostitutes via curb-side meters a success that would continue.

The municipal government said a "sex tax" covering levies on sauna clubs, "erotic centers" and automated pay stations similar to parking meters that were rolled out in August 2011 had brought in around $326,000 last year.

The former West German capital became the first city in Germany to introduce the meters for sex workers as a means of extending a general tax on prostitution beyond brothels to the streets of Bonn.

The meters were installed in an industrial area near the center of town used by prostitutes to solicit clients, with each sex worker paying €6 per night worked, regardless of how many customers they have. Those repeatedly caught without a ticket can be fined.

Millionaires

People and households earning $1 million or more annually made up 0.1 percent, or about 235,000, of the 140 million tax returns filed in 2009. Tax returns filed by people making $10 million or more amounted to 8,274. About 97% of all filers earned less than $200,000.

IRS

It happened on this day in 1862. It started with the the high cost of the the US at war with itself. To help pay for the Civil War, Congress established the Bureau of Internal Revenue. President Abraham Lincoln signed the bill into law, for the  feds to collect a three percent tax on incomes ranging from $600 to $10,000, and five percent on incomes over $10,000. It was passed as a temporary law.

The Bureau became the Internal Revenue Service in 1913 when the 16th amendment was added to the Constitution permitting the Government to collect a tax on income. How ironic that a few days before we celebrate our independence, they took away our independence from taxes.