Hidden Taxes

Taxes don't just raise money for the government. They also impact markets. Put a tax on something, and that thing will get more expensive. If the tax is high enough, people might be less inclined to buy that thing...the higher cost cuts into demand.

Sometimes, that's the point. Cigarette taxes raise money for the government, but also make cigarettes less appealing. A pack becomes super-expensive, so the government can achieve its health policy goal of lowering smoking rates.

A hidden tax is not immediately visible. It's not broken out on the receipt like a sales tax or itemized on a paycheck like income tax. But consumers feel it in higher prices.

Gas taxes are a prominent example of a hidden tax. The price of every gallon of gas includes some taxes, though you wouldn't know the amount unless you looked it up.

Tariffs on foreign goods also lead to hidden taxes. Importers raise their prices to make up for the taxes, meaning you pay more for the items. However, the tax isn't explicitly part of the sales price...it's just quietly slipped in there.