Many states have additional taxpayer safeguards for legislation that raises taxes, but in an effort to evade these safeguards, politicians are playing a word game. Any assessment that raises money in excess of what is needed to defray costs is a tax, and when the primary purpose of an enactment is to offset the cost of providing a service, it is a fee.
Additional questions about the definition of tax or any other are of tax law? Contact us at (202) 464-6200.
If you found this material useful, please consider making a donation to the Tax Foundation.Donate
More from the Center for Legal Reform
We develop innovative pro-growth ideas in tax law with leading experts, educate the legal community and the public about economics and taxpayer protections, and advocate that judicial and policy decisions on tax law promote simple, neutral, transparent, and stable tax policiesview
Join the Tax Foundation's fight for sound tax policy Go
With a vote looming on an Illinois bill (HB 689) that would impose a graduated income tax with a top rate of 11.25 percent on pass-through businesses (previous coverage here and here), the Illinois Department of Revenue...