tax base

noun
Updated on: 26 Jul 2017

Definition of tax base

:the wealth (such as real estate or income) within a jurisdiction that is liable to taxation

Examples of tax base in a Sentence

  1. an area with a large tax base

First Known Use of tax base

circa 1943


Financial Definition of TAX BASE

tax base

What It Is

A tax base is the total amount of assets or revenue that a government can tax.

How It Works

For example, let's assume that in Big Town there is $500,000,000 of commercial and residential real estate that is subject to property taxes. If the local school district gets all of its funding from those property taxes, then its tax base is $500,000,000.

Taxes can be based on any kind of asset or revenue stream. For example, to calculate the tax base for a sales tax, you may consider the total spending power of the adults in the community as the tax base. Revenue streams from a gas tax might consider total gas station revenue as the tax base.

Why It Matters

The size and growth (or lack of growth) of the tax base is crucial to the planning efforts of any local, state, or federal government. Because the size of the tax base influences the taxable revenues that are available to a government, there is a direct correlation between the economic condition of a city as a whole and the budget of the government that serves it. Accordingly, governments must always consider how their decisions will affect their tax base.


TAX BASE Defined for English Language Learners

tax base

noun

Definition of tax base for English Language Learners

  • : the amount of money or property that can be taxed within an area


Law Dictionary

tax base

noun

legal Definition of tax base

1 :a sum (as the total assessed valuation of property in a county) used as the basis of taxation
2 :the source of tax revenue for a governmental body
  • change the tax base of a school district to reduce the property tax burden

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