To tax (from the Latin taxo; "I estimate") is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid labour).

A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the government [...] a payment exacted by legislative authority."^[1] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [...] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."^[1]

Overview[link]

Pieter Brueghel the Younger, The tax collector, 1640

The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. Governments also obtain resources by creating money (e.g., printing bills and minting coins), through voluntary gifts (e.g., contributions to public universities and museums), by imposing penalties (e.g., traffic fines), by borrowing, and by confiscating wealth. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the Public sector levied on a basis of predetermined criteria and without reference to specific benefit received.

In modern taxation systems, taxes are levied in money; but, in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the United Kingdom. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration)^[2] may be imposed on the non-paying entity or individual.

Tax rates[link]

Taxes are most often levied as a percentage, called the tax rate. An important distinction when talking about tax rates is to distinguish between the marginal rate and the effective (average) rate. The effective rate is the total tax paid divided by the total amount the tax is paid on, while the marginal rate is the rate paid on the next dollar of income earned. For example, if income is taxed on a formula of 5% from $0 up to $50,000, 10% from $50,000 to $100,000, and 15% over $100,000, a taxpayer with income of $175,000 would pay a total of $18,750 in taxes.

Tax calculation

(0.05*50,000) + (0.10*50,000) + (0.15*75,000) = 18,750

The "effective rate" would be 10.7%:

18,750/175,000 = 0.107

The "marginal rate" would be 15%.

Purposes and effects[link]

Money provided by taxation has been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Governments also use taxes to fund welfare and public services. A portion of taxes also go to pay off the state's debt and the interest this debt accumulates. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and modernizing states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.

Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population. Historically, the nobility were supported by taxes on the poor; modern social security systems are intended to support the poor, the disabled, or the retired by taxes on those who are still working. In addition, taxes are applied to fund foreign aid and military ventures, to influence the macroeconomic performance of the economy (the government's strategy for doing this is called its fiscal policy; see also tax exemption), or to modify patterns of consumption or employment within an economy, by making some classes of transaction more or less attractive.

A nation's tax system is often a reflection of its communal values or/and the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community that the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power.

All large businesses incur administrative costs in the process of delivering revenue collected from customers to the suppliers of the goods or services being purchased. Taxation is no different, the resource collected from the public through taxation is always greater than the amount which can be used by the government. The difference is called compliance cost, and includes for example the labour cost and other expenses incurred in complying with tax laws and rules. The collection of a tax in order to spend it on a specified purpose, for example collecting a tax on alcohol to pay directly for alcoholism rehabilitation centres, is called hypothecation. This practice is often disliked by finance ministers, since it reduces their freedom of action. Some economic theorists consider the concept to be intellectually dishonest since, in reality, money is fungible. Furthermore, it often happens that taxes or excises initially levied to fund some specific government programs are then later diverted to the government general fund. In some cases, such taxes are collected in fundamentally inefficient ways, for example highway tolls.

Some economists, especially neo-classical economists, argue that all taxation creates market distortion and results in economic inefficiency. They have therefore sought to identify the kind of tax system that would minimize this distortion.

Since governments also resolve commercial disputes, especially in countries with common law, similar arguments are sometimes used to justify a sales tax or value added tax. Others (e.g. libertarians) argue that most or all forms of taxes are immoral due to their involuntary (and therefore eventually coercive/violent) nature. The most extreme anti-tax view is anarcho-capitalism, in which the provision of all social services should be voluntarily bought by the person(s) using them.

Proportional, progressive, regressive, and lump-sum[link]

An important feature of tax systems is the percentage of the tax burden as it relates to income or consumption. The terms progressive, regressive, and proportional are used to describe the way the rate progresses from low to high, from high to low, or proportionally. The terms describe a distribution effect, which can be applied to any type of tax system (income or consumption) that meets the definition.

• A progressive tax is a tax imposed so that the effective tax rate increases as the amount to which the rate is applied increases.
• The opposite of a progressive tax is a regressive tax, where the effective tax rate decreases as the amount to which the rate is applied increases. This effect is commonly produced where means testing is used to withdraw tax allowances or state benefits.
• In between is a proportional tax, where the effective tax rate is fixed, while the amount to which the rate is applied increases.
• A lump-sum tax is a tax that is a fixed amount, no matter the change in circumstance of the taxed entity.

The terms can also be used to apply meaning to the taxation of select consumption, such as a tax on luxury goods and the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption and decreases a tax burden on low end consumption.^[3][4][5]

Direct and indirect[link]

Taxes are sometimes referred to as "direct taxes" or "indirect taxes". The meaning of these terms can vary in different contexts, which can sometimes lead to confusion. An economic definition, by Atkinson, states that "...direct taxes may be adjusted to the individual characteristics of the taxpayer, whereas indirect taxes are levied on transactions irrespective of the circumstances of buyer or seller."^[6] According to this definition, for example, income tax is "direct", and sales tax is "indirect". In law, the terms may have different meanings. In U.S. constitutional law, for instance, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership. Indirect taxes are imposed on events, rights, privileges, and activities.^[7] Thus, a tax on the sale of property would be considered an indirect tax, whereas the tax on simply owning the property itself would be a direct tax.

Kinds of taxes[link]

The Organisation for Economic Co-operation and Development (OECD) publishes an analysis of tax systems of member countries. As part of such analysis, OECD developed a definition and system of classification of internal taxes,^[8] generally followed below. In addition, many countries impose taxes (tariffs) on the import of goods.

Taxes on income[link]

Income tax[link]

Many jurisdictions tax the income of individuals and business entities, including corporations. Generally the tax is imposed on net profits from business, net gains, and other income. Computation of income subject to tax may be determined under accounting principles used in the jurisdiction, which may be modified or replaced by tax law principles in the jurisdiction. The incidence of taxation varies by system, and some systems may be viewed as progressive or regressive. Rates of tax may vary or be constant (flat) by income level. Many systems allow individuals certain personal allowances and other nonbusiness reductions to taxable income.

Personal income tax is often collected on a pay-as-you-earn basis, with small corrections made soon after the end of the tax year. These corrections take one of two forms: payments to the government, for taxpayers who have not paid enough during the tax year; and tax refunds from the government for those who have overpaid. Income tax systems will often have deductions available that lessen the total tax liability by reducing total taxable income. They may allow losses from one type of income to be counted against another. For example, a loss on the stock market may be deducted against taxes paid on wages. Other tax systems may isolate the loss, such that business losses can only be deducted against business tax by carrying forward the loss to later tax years.

Capital gains tax[link]

Most jurisdictions imposing an income tax treat capital gains as part of income subject to tax. Capital gain is generally gain on sale of capital assets, i.e., those assets not held for sale in the ordinary course of business. Capital assets include personal assets in many jurisdictions. Some jurisdictions provide preferential rates of tax or only partial taxation for capital gains. Some jurisdictions impose different rates or levels of capital gains taxation based on the length of time the asset was held.

Corporate tax[link]

Corporate tax refers to income, capital, net worth, or other taxes imposed on corporations. Rates of tax and the taxable base for corporations may differ from those for individuals or other taxable persons.

Social security contributions[link]

Many countries provide publicly funded retirement or health care systems.^[9] In connection with these systems, the country typically requires employers and/or employees to make compulsory payments.^[10] These payments are often computed by reference to wages or earnings from self employment. Tax rates are generally fixed, but a different rate may be imposed on employers than on employees.^[11] Some systems provide an upper limit on earnings subject to the tax. A few systems provide that the tax is payable only on wages above a particular amount. Such upper or lower limits may apply for retirement but not health care components of the tax.

Taxes on payroll or workforce[link]

Unemployment and similar taxes are often imposed on employers based on total payroll. These taxes may be imposed in both the country and sub-country levels.^[12]

Taxes on property[link]

Recurrent [property taxes] may be imposed on immovable property (real property) and some classes of movable property. In addition, recurrent taxes may be imposed on net wealth of individuals or corporations.^[13] Many jurisdictions impose estate tax, gift tax or other inheritance taxes on property at death or gift transfer. Some jurisdictions impose taxes on financial or capital transactions.

Property tax[link]

A property tax (or millage tax) is an ad valorem tax levy on the value of property that the owner of the property is required to pay to a government in which the property is situated. Multiple jurisdictions may tax the same property. There are three general varieties of property: land, improvements to land (immovable man-made things, e.g. buildings) and personal property (movable things). Real estate or realty is the combination of land and improvements to land.

Property taxes are usually charged on a recurrent basis (e.g., yearly). A common type of property tax is an annual charge on the ownership of real estate, where the tax base is the estimated value of the property. For a period of over 150 years from 1695 a window tax was levied in England, with the result that one can still see listed buildings with windows bricked up in order to save their owners money. A similar tax on hearths existed in France and elsewhere, with similar results. The two most common type of event driven property taxes are stamp duty, charged upon change of ownership, and inheritance tax, which is imposed in many countries on the estates of the deceased.

In contrast with a tax on real estate (land and buildings), a land value tax is levied only on the unimproved value of the land ("land" in this instance may mean either the economic term, i.e., all natural resources, or the natural resources associated with specific areas of the Earth's surface: "lots" or "land parcels"). Proponents of land value tax argue that it is economically justified, as it will not deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do.^[14]

When real estate is held by a higher government unit or some other entity not subject to taxation by the local government, the taxing authority may receive a payment in lieu of taxes to compensate it for some or all of the foregone tax revenue.

In many jurisdictions (including many American states), there is a general tax levied periodically on residents who own personal property (personalty) within the jurisdiction. Vehicle and boat registration fees are subsets of this kind of tax. The tax is often designed with blanket coverage and large exceptions for things like food and clothing. Household goods are often exempt when kept or used within the household.^[15] Any otherwise non-exempt object can lose its exemption if regularly kept outside the household.^[15] Thus, tax collectors often monitor newspaper articles for stories about wealthy people who have lent art to museums for public display, because the artworks have then become subject to personal property tax.^[15] If an artwork had to be sent to another state for some touch-ups, it may have become subject to personal property tax in that state as well.^[15]

Inheritance tax[link]

Inheritance tax, estate tax, and death tax or duty are the names given to various taxes which arise on the death of an individual. In United States tax law, there is a distinction between an estate tax and an inheritance tax: the former taxes the personal representatives of the deceased, while the latter taxes the beneficiaries of the estate. However, this distinction does not apply in other jurisdictions; for example, if using this terminology UK inheritance tax would be an estate tax.

Expatriation tax[link]

An Expatriation Tax is a tax on individuals who renounce their citizenship or residence. The tax is often imposed based on a deemed disposition of all the individual's property. One example is the United States under the American Jobs Creation Act, where any individual who has a net worth of $2 million or an average income-tax liability of $127,000 who renounces his or her citizenship and leaves the country is automatically assumed to have done so for tax avoidance reasons and is subject to a higher tax rate.^[16]

Transfer tax[link]

Historically, in many countries, a contract needed to have a stamp affixed to make it valid. The charge for the stamp was either a fixed amount or a percentage of the value of the transaction. In most countries the stamp has been abolished but stamp duty remains. Stamp duty is levied in the UK on the purchase of shares and securities, the issue of bearer instruments, and certain partnership transactions. Its modern derivatives, stamp duty reserve tax and stamp duty land tax, are respectively charged on transactions involving securities and land. Stamp duty has the effect of discouraging speculative purchases of assets by decreasing liquidity. In the United States transfer tax is often charged by the state or local government and (in the case of real property transfers) can be tied to the recording of the deed or other transfer documents.

Wealth (net worth) tax[link]

Some countries' governments will require declaration of the tax payers' balance sheet (assets and liabilities), and from that exact a tax on net worth (assets minus liabilities), as a percentage of the net worth, or a percentage of the net worth exceeding a certain level. The tax may be levied on "natural" or legal "persons". An example is France's ISF.

Taxes on goods and services[link]

Value added tax (Goods and Services Tax)[link]

A value added tax (VAT), also known as Goods and Services Tax (G.S.T), Single Business Tax, or Turnover Tax in some countries, applies the equivalent of a sales tax to every operation that creates value. To give an example, sheet steel is imported by a machine manufacturer. That manufacturer will pay the VAT on the purchase price, remitting that amount to the government. The manufacturer will then transform the steel into a machine, selling the machine for a higher price to a wholesale distributor. The manufacturer will collect the VAT on the higher price, but will remit to the government only the excess related to the "value added" (the price over the cost of the sheet steel). The wholesale distributor will then continue the process, charging the retail distributor the VAT on the entire price to the retailer, but remitting only the amount related to the distribution mark-up to the government. The last VAT amount is paid by the eventual retail customer who cannot recover any of the previously paid VAT. For a VAT and sales tax of identical rates, the total tax paid is the same, but it is paid at differing points in the process.

VAT is usually administrated by requiring the company to complete a VAT return, giving details of VAT it has been charged (referred to as input tax) and VAT it has charged to others (referred to as output tax). The difference between output tax and input tax is payable to the Local Tax Authority. If input tax is greater than output tax the company can claim back money from the Local Tax Authority.

Sales taxes[link]

Sales taxes are levied when a commodity is sold to its final consumer. Retail organizations contend that such taxes discourage retail sales. The question of whether they are generally progressive or regressive is a subject of much current debate. People with higher incomes spend a lower proportion of them, so a flat-rate sales tax will tend to be regressive. It is therefore common to exempt food, utilities and other necessities from sales taxes, since poor people spend a higher proportion of their incomes on these commodities, so such exemptions make the tax more progressive. This is the classic "You pay for what you spend" tax, as only those who spend money on non-exempt (i.e. luxury) items pay the tax.

A small number of U.S. states rely entirely on sales taxes for state revenue, as those states do not levy a state income tax. Such states tend to have a moderate to large amount of tourism or inter-state travel that occurs within their borders, allowing the state to benefit from taxes from people the state would otherwise not tax. In this way, the state is able to reduce the tax burden on its citizens. The U.S. states that do not levy a state income tax are Alaska, Tennessee, Florida, Nevada, South Dakota, Texas,^[17] Washington state, and Wyoming. Additionally, New Hampshire and Tennessee levy state income taxes only on dividends and interest income. Of the above states, only Alaska and New Hampshire do not levy a state sales tax. Additional information can be obtained at the Federation of Tax Administrators website.

In the United States, there is a growing movement^[18] for the replacement of all federal payroll and income taxes (both corporate and personal) with a national retail sales tax and monthly tax rebate to households of citizens and legal resident aliens. The tax proposal is named FairTax. In Canada, the federal sales tax is called the Goods and Services tax (GST) and now stands at 5%. The provinces of British Columbia, Saskatchewan, Manitoba, and Prince Edward Island also have a provincial sales tax [PST]. The provinces of Nova Scotia, New Brunswick, Newfoundland & Labrador, and Ontario have harmonized their provincial sales taxes with the GST—Harmonized Sales Tax [HST], and thus is a full VAT. The province of Quebec collects the Quebec Sales Tax [QST] which is based on the GST with certain differences. Most businesses can claim back the GST, HST and QST they pay, and so effectively it is the final consumer who pays the tax.

Excises[link]

Unlike an ad valorem, an excise is not a function of the value of the product being taxed. Excise taxes are based on the quantity, not the value, of product purchased. For example, in the United States, the Federal government imposes an excise tax of 18.4 cents per U.S. gallon (4.86¢/L) of gasoline, while state governments levy an additional 8 to 28 cents per U.S. gallon. Excises on particular commodities are frequently hypothecated. For example, a fuel excise (use tax) is often used to pay for public transportation, especially roads and bridges and for the protection of the environment. A special form of hypothecation arises where an excise is used to compensate a party to a transaction for alleged uncontrollable abuse; for example, a blank media tax is a tax on recordable media such as CD-Rs, whose proceeds are typically allocated to copyright holders. Critics charge that such taxes blindly tax those who make legitimate and illegitimate usages of the products; for instance, a person or corporation using CD-R's for data archival should not have to subsidize the producers of popular music.

Excises (or exemptions from them) are also used to modify consumption patterns (social engineering). For example, a high excise is used to discourage alcohol consumption, relative to other goods. This may be combined with hypothecation if the proceeds are then used to pay for the costs of treating illness caused by alcohol abuse. Similar taxes may exist on tobacco, pornography, etc., and they may be collectively referred to as "sin taxes". A carbon tax is a tax on the consumption of carbon-based non-renewable fuels, such as petrol, diesel-fuel, jet fuels, and natural gas. The object is to reduce the release of carbon into the atmosphere. In the United Kingdom, vehicle excise duty is an annual tax on vehicle ownership.

Tariff[link]

An import or export tariff (also called customs duty or impost) is a charge for the movement of goods through a political border. Tariffs discourage trade, and they may be used by governments to protect domestic industries. A proportion of tariff revenues is often hypothecated to pay government to maintain a navy or border police. The classic ways of cheating a tariff are smuggling or declaring a false value of goods. Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A customs union has a common external tariff, and the participating countries share the revenues from tariffs on goods entering the customs union.

Other taxes[link]

License fees[link]

Occupational taxes or license fees may be imposed on businesses or individuals engaged in certain businesses. Many jurisdictions impose a tax on vehicles.

Poll tax[link]

A poll tax, also called a per capita tax, or capitation tax, is a tax that levies a set amount per individual. It is an example of the concept of fixed tax. One of the earliest taxes mentioned in the Bible of a half-shekel per annum from each adult Jew (Ex. 30:11-16) was a form of poll tax. Poll taxes are administratively cheap because they are easy to compute and collect and difficult to cheat. Economists have considered poll taxes economically efficient because people are presumed to be in fixed supply. However, poll taxes are very unpopular because poorer people pay a higher proportion of their income than richer people. In addition, the supply of people is in fact not fixed over time: on average, couples will choose to have fewer children if a poll tax is imposed.^{[19][not in citation given]} The introduction of a poll tax in medieval England was the primary cause of the 1381 Peasants' Revolt. Scotland was the first to be used to test the new poll tax in 1989 with England and Wales in 1990. The change from a progressive local taxation based on property values to a single-rate form of taxation regardless of ability to pay (the Community Charge, but more popularly referred to as the Poll Tax), led to widespread refusal to pay and to incidents of civil unrest, known colloquially as the 'Poll Tax Riots'.

Other[link]

Some types of taxes have been proposed but not actually adopted in any major jurisdiction. These include:

• Bank tax
• Financial transaction taxes including currency transaction taxes

Descriptive labels given some taxes[link]

Ad valorem[link]

An ad valorem tax is one where the tax base is the value of a good, service, or property. Sales taxes, tariffs, property taxes, inheritance taxes, and value added taxes are different types of ad valorem tax. An ad valorem tax is typically imposed at the time of a transaction (sales tax or value added tax (VAT)) but it may be imposed on an annual basis (property tax) or in connection with another significant event (inheritance tax or tariffs). An alternative to ad valorem taxation is an excise tax, where the tax base is the quantity of something, regardless of its price.

Consumption tax[link]

Consumption tax refers to any tax on non-investment spending, and can be implemented by means of a sales tax, consumer value added tax, or by modifying an income tax to allow for unlimited deductions for investment or savings.

Environmental tax[link]

This includes natural resources consumption tax, greenhouse gas tax (Carbon tax), "sulfuric tax", and others. The stated purpose is to reduce the environmental impact by repricing.

Fees and effective taxes[link]

Governments may charge user fees, tolls, or other types of assessments in exchange of particular goods, services, or use of property. These are generally not considered taxes, as long as they are levied as payment for a direct benefit to the individual paying.^[20] Such fees include:

• Tolls: a fee charged to travel via a road, bridge, tunnel, canal, waterway or other transportation facilities. Historically tolls have been used to pay for public bridge, road and tunnel projects. They have also been used in privately constructed transport links. The toll is likely to be a fixed charge, possibly graduated for vehicle type, or for distance on long routes.
• User fees, such as those charged for use of parks or other government owned facilities.
• Ruling fees charged by governmental agencies to make determinations in particular situations.

Some scholars refer to certain economic effects as taxes, though they are not levies imposed by governments. These include:

• Inflation tax: the economic disadvantage suffered by holders of cash and cash equivalents in one denomination of currency due to the effects of expansionary monetary policy^[21]
• Financial repression: Government policies such as interest rate caps on government debt, financial regulations such as reserve requirements and capital controls, and barriers to entry in markets where the government owns or controls businesses.^[22]

History[link]

Egyptian peasants seized for non-payment of taxes. (Pyramid Age)

The first known system of taxation was in Ancient Egypt around 3000 BC - 2800 BC in the first dynasty of the Old Kingdom.^[23] The earliest and most widespread form of taxation was the corvée and tithe. The corvée was forced labour provided to the state by peasants too poor to pay other forms of taxation (labour in ancient Egyptian is a synonym for taxes).^[24] Records from the time document that the pharaoh would conduct a biennial tour of the kingdom, collecting tithes from the people. Other records are granary receipts on limestone flakes and papyrus.^[25] Early taxation is also described in the Bible. In Genesis (chapter 47, verse 24 - the New International Version), it states "But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children". Joseph was telling the people of Egypt how to divide their crop, providing a portion to the Pharaoh. A share (20%) of the crop was the tax.

Later, in the Persian Empire, a regulated and sustainable tax system was introduced by Darius I the Great in 500 BC;^[26] the Persian system of taxation was tailored to each Satrapy (the area ruled by a Satrap or provincial governor). At differing times, there were between 20 and 30 Satrapies in the Empire and each was assessed according to its supposed productivity. It was the responsibility of the Satrap to collect the due amount and to send it to the emperor, after deducting his expenses (the expenses and the power of deciding precisely how and from whom to raise the money in the province, offer maximum opportunity for rich pickings). The quantities demanded from the various provinces gave a vivid picture of their economic potential. For instance, Babylon was assessed for the highest amount and for a startling mixture of commodities; 1,000 silver talents and four months supply of food for the army. India, a province fabled for its gold, was to supply gold dust equal in value to the very large amount of 4,680 silver talents. Egypt was known for the wealth of its crops; it was to be the granary of the Persian Empire (and, later, of the Roman Empire) and was required to provide 120,000 measures of grain in addition to 700 talents of silver. This was exclusively a tax levied on subject peoples. Persians and Medes paid no tax, but, they were liable at any time to serve in the army.^[27]

The Rosetta Stone, a tax concession issued by Ptolemy V in 196 BC and written in three languages "led to the most famous decipherment in history—the cracking of hieroglyphics".^[28]

In India, Islamic rulers imposed jizya (a poll tax on non-Muslims) starting in the 11th century. It was abolished by Akbar.

Taxation levels[link]

Numerous records of government tax collection in Europe since at least the 17th century are still available today. But taxation levels are hard to compare to the size and flow of the economy since production numbers are not as readily available, however. Government expenditures and revenue in France during the 17th century went from about 24.30 million livres in 1600-10 to about 126.86 million livres in 1650-59 to about 117.99 million livres in 1700-10 when government debt had reached 1.6 billion livres. In 1780–89, it reached 421.50 million livres.^[29] Taxation as a percentage of production of final goods may have reached 15%–20% during the 17th century in places such as France, the Netherlands, and Scandinavia. During the war-filled years of the eighteenth and early nineteenth century, tax rates in Europe increased dramatically as war became more expensive and governments became more centralized and adept at gathering taxes. This increase was greatest in England, Peter Mathias and Patrick O'Brien found that the tax burden increased by 85% over this period. Another study confirmed this number, finding that per capita tax revenues had grown almost sixfold over the eighteenth century, but that steady economic growth had made the real burden on each individual only double over this period before the industrial revolution. Average tax rates were higher in Britain than France the years before the French Revolution, twice in per capita income comparison, but they were mostly placed on international trade. In France, taxes were lower but the burden was mainly on landowners, individuals, and internal trade and thus created far more resentment.^[30]

Taxation as a percentage of GDP in 2003 was 56.1% in Denmark, 54.5% in France, 49.0% in the Euro area, 42.6% in the United Kingdom, 35.7% in the United States, 35.2% in Ireland, and among all OECD members an average of 40.7%.^[31][32]

Forms of taxation[link]

In monetary economies prior to fiat banking, a critical form of taxation was seigniorage, the tax on the creation of money.

Other obsolete forms of taxation include:

• Scutage, which is paid in lieu of military service; strictly speaking, it is a commutation of a non-tax obligation rather than a tax as such but functioning as a tax in practice.
• Tallage, a tax on feudal dependents.
• Tithe, a tax-like payment (one tenth of one's earnings or agricultural produce), paid to the Church (and thus too specific to be a tax in strict technical terms). This should not be confused with the modern practice of the same name which is normally voluntary.
• (Feudal) aids, a type of tax or due that was paid by a vassal to his lord during feudal times.
• Danegeld, a medieval land tax originally raised to pay off raiding Danes and later used to fund military expenditures.
• Carucage, a tax which replaced the danegeld in England.
• Tax farming, the principle of assigning the responsibility for tax revenue collection to private citizens or groups.
• Socage, a feudal tax system based on land rent.
• Burgage, a feudal tax system based on land rent.

Some principalities taxed windows, doors, or cabinets to reduce consumption of imported glass and hardware. Armoires, hutches, and wardrobes were employed to evade taxes on doors and cabinets. In some circumstances, taxes are also used to enforce public policy like congestion charge (to cut road traffic and encourage public transport) in London. In Tsarist Russia, taxes were clamped on beards. Today, one of the most-complicated taxation systems worldwide is in Germany. Three quarters of the world's taxation literature refers to the German system.^{[citation needed]} There are 118 laws, 185 forms, and 96,000 regulations, spending €3.7 billion to collect the income tax. Today, governments in more advanced economies in (i.e. Europe and North America) tend to rely more on direct taxes, while developing economies (i.e. India and several African countries) rely more on indirect taxes.

Economic effects[link]

In economic terms, taxation transfers wealth from households or businesses to the government of a nation. The side-effects of taxation and theories about how best to tax are an important subject in microeconomics. Taxation is almost never a simple transfer of wealth. Economic theories of taxation approach the question of how to maximize economic welfare through taxation.

Tax incidence[link]

Law establishes from whom a tax is collected. In many countries, taxes are imposed on business (such as corporate taxes or portions of payroll taxes). However, who ultimately pays the tax (the tax "burden") is determined by the marketplace as taxes become embedded into production costs. Economic theory suggests that the economic effect of tax does not necessarily fall at the point where it is legally levied. For instance, a tax on employment paid by employers will impact on the employee, at least in the long run. The greatest share of the tax burden tends to fall on the most inelastic factor involved—the part of the transaction which is affected least by a change in price. So, for instance, a tax on wages in a town will (at least in the long run) affect property-owners in that area.

Diagram illustrating taxes effect

Depending on how quantities supplied and demanded vary with price (the "elasticities" of supply and demand), a tax can be absorbed by the seller (in the form of lower pre-tax prices), or by the buyer (in the form of higher post-tax prices). If the elasticity of supply is low, more of the tax will be paid by the supplier. If the elasticity of demand is low, more will be paid by the customer; and, contrariwise for the cases where those elasticities are high. If the seller is a competitive firm, the tax burden is distributed over the factors of production depending on the elasticities thereof; this includes workers (in the form of lower wages), capital investors (in the form of loss to shareholders), landowners (in the form of lower rents), entrepreneurs (in the form of lower wages of superintendence) and customers (in the form of higher prices).

To show this relationship, suppose that the market price of a product is $1.00, and that a $0.50 tax is imposed on the product that, by law, is to be collected from the seller. If the product has an elastic demand, a greater portion of the tax will be absorbed by the seller. This is because goods with elastic demand cause a large decline in quantity demanded for a small increase in price. Therefore in order to stabilize sales, the seller absorbs more of the additional tax burden. For example, the seller might drop the price of the product to $0.70 so that, after adding in the tax, the buyer pays a total of $1.20, or $0.20 more than he did before the $0.50 tax was imposed. In this example, the buyer has paid $0.20 of the $0.50 tax (in the form of a post-tax price) and the seller has paid the remaining $0.30 (in the form of a lower pre-tax price).^[33]

Reduced economic welfare[link]

Most taxes have side effects that reduce economic welfare, either by mandating unproductive labor (compliance costs) or by creating distortions to economic incentives (deadweight loss and perverse incentives).

Cost of compliance[link]

Although governments must spend money on tax collection activities, some of the costs, particularly for keeping records and filling out forms, are borne by businesses and by private individuals. These are collectively called costs of compliance. More complex tax systems tend to have higher compliance costs. This fact can be used as the basis for practical or moral arguments in favor of tax simplification (such as the FairTax or OneTax, and some flat tax proposals).

Deadweight costs of taxation[link]

In the absence of negative externalities, the introduction of taxes into a market reduces economic efficiency by causing deadweight loss. In a competitive market the price of a particular economic good adjusts to ensure that all trades which benefit both the buyer and the seller of a good occur. The introduction of a tax causes the price received by the seller to be less than the cost to the buyer by the amount of the tax. This causes fewer transactions to occur, which reduces economic welfare; the individuals or businesses involved are less well off than before the tax. The tax burden and the amount of deadweight cost is dependent on the elasticity of supply and demand for the good taxed.

Most taxes—including income tax and sales tax—can have significant deadweight costs. The only way to avoid deadweight costs in an economy that is generally competitive is to refrain from taxes that change economic incentives. Such taxes include the land value tax,^[34] where the tax is on a good in completely inelastic supply, a lump sum tax such as a poll tax (head tax) which is paid by all adults regardless of their choices. Arguably a windfall profits tax which is entirely unanticipated can also fall into this category.

Perverse incentives[link]

Complexity of the tax code in developed economies offer perverse tax incentives. The more details of tax policy there are, the more opportunities for legal tax avoidance and illegal tax evasion. These not only result in lost revenue, but involve additional costs: for instance, payments made for tax advice are essentially deadweight costs because they add no wealth to the economy. Perverse incentives also occur because of non-taxable 'hidden' transactions; for instance, a sale from one company to another might be liable for sales tax, but if the same goods were shipped from one branch of a corporation to another, no tax would be payable.

To address these issues, economists often suggest simple and transparent tax structures which avoid providing loopholes. Sales tax, for instance, can be replaced with a value added tax which disregards intermediate transactions.

Reduced production[link]

If a tax is paid on outsourced services that is not also charged on services performed for oneself, then it may be cheaper to perform the services oneself than to pay someone else — even considering losses in economic efficiency.^[35][36]

For example, suppose jobs A and B are both valued at $1 on the market. And suppose that because of your unique abilities, you can do job A twice over (100% extra output) in the same effort as it would take you to do job B. But job B is the one that you need done right now. Under perfect division of labor, you would do job A and somebody else would do job B. Your unique abilities would always be rewarded.

Income taxation has the worst effect on division of labor in the form of barter. Suppose that the person doing job B is actually interested in having job A done for him. Now suppose you could amazingly do job A four times over, selling half your work on the market for cash just to pay your tax bill. The other half of the work you do for somebody who does job B twice over but he has to sell off half to pay his tax bill. You're left with one unit of job B, but only if you were 400% as productive doing job A! In this case of 50% tax on barter income, anything less than 400% productivity will cause the division of labor to fail.

In summary, depending on the situation a 50% tax rate can cause the division of labor to fail even where productivity gains of up to 300% would have resulted. Even a mere 30% tax rate can negate the advantage of a 100% productivity gain.^[37]

Increased economic welfare[link]

Pigovian taxes[link]

The existence of a tax can increase economic efficiency in some cases. If there is a negative externality associated with a good, meaning that it has negative effects not felt by the consumer, then a free market will trade too much of that good. By taxing the good, the government can increase overall welfare as well as raising revenue. This type of tax is called a Pigovian tax, after economist Arthur Pigou.

Possible Pigovian taxes include those on polluting fuels (like petrol), taxes on goods which incur public healthcare costs (such as alcohol or tobacco), and charges for existing 'free' public goods (like congestion charging) are another possibility.

Reduced inequality[link]

In theory, progressive taxation may have the effect of reducing economic inequality. This effect occurs even when the tax revenue isn't redistributed.

Views on taxation[link]

Support for taxation[link]

According to most political philosophies, taxes are justified as they fund activities that are necessary and beneficial to society. Additionally, progressive taxation can be used to reduce economic inequality in a society. According to this view, taxation in modern nation-states benefit the majority of the population and social development.^[39] A common presentation of this view, paraphrasing various statements by Oliver Wendell Holmes, Jr. is "Taxes are the price of civilization".^[40]

It can also be argued that in a democracy, because the government is the party performing the act of imposing taxes, society as a whole decides how the tax system should be organized.^[41] The American Revolution's "No taxation without representation" slogan implied this view. For traditional conservatives, the payment of taxation is justified as part of the general obligations of citizens to obey the law and support established institutions. The conservative position is encapsulated in perhaps the most famous adage of public finance, "An old tax is a good tax".^[42] Conservatives advocate the "fundamental conservative premise that no one should be excused from paying for government, lest they come to believe that government is costless to them with the certain consequence that they will demand more government 'services'.".^[43] Social democrats generally favor higher levels of taxation to fund public provision of a wide range of services such as universal health care and education, as well as the provision of a range of welfare benefits.^[44] As argued by Tony Crosland and others, the capacity to tax income from capital is a central element of the social democratic case for a mixed economy as against Marxist arguments for comprehensive public ownership of capital.^{[citation needed]} Many libertarians recommend a minimal level of taxation in order to maximize the protection of liberty.^{[citation needed]}

Compulsory taxation of individuals, such as income tax, is often justified on grounds including territorial sovereignty, and the social contract. Defenders of business taxation argue that it is an efficient method of taxing income that ultimately flows to individuals, or that separate taxation of business is justified on the grounds that commercial activity necessarily involves use of publicly established and maintained economic infrastructure, and that businesses are in effect charged for this use.^[45] Georgist economists argue that all of the economic rent collected from natural resources (land, mineral extraction, fishing quotas, etc.) is unearned income, and belongs to the community rather than any individual. They advocate a high tax (the "Single Tax") on land and other natural resources to return this unearned income to the state, but no other taxes.

Opposition to taxation[link]

Because payment of tax is compulsory and enforced by the legal system, some political philosophies view taxation as theft (or as slavery, or as a violation of property rights), or tyranny, accusing the government of levying taxes via force and coercive means.^[46] Voluntaryists, individualist anarchists, objectivists, anarcho-capitalists, and libertarians see taxation as government aggression (see zero aggression principle). The view that democracy legitimizes taxation is rejected by those who argue that all forms of government, including laws chosen by democratic means, are fundamentally oppressive. According to Ludwig von Mises, "society as a whole" should not make such decisions, due to methodological individualism.^[47] Libertarian opponents of taxation claim that governmental protection, such as police and defense forces might be replaced by market alternatives such as private defense agencies, arbitration agencies or voluntary contributions.^[48] Walter E. Williams, professor of economics at George Mason University, stated "Government income redistribution programs produce the same result as theft. In fact, that's what a thief does; he redistributes income. The difference between government and thievery is mostly a matter of legality."^[49]

Taxation has also been opposed by communists and socialists. Karl Marx assumed that taxation would be unnecessary after the advent of communism and looked forward to the "withering away of the state". In socialist economies such as that of China, taxation played a minor role, since most government income was derived from the ownership of enterprises, and it was argued by some that taxation was not necessary.^[50] While the morality of taxation is sometimes questioned, most arguments about taxation revolve around the degree and method of taxation and associated government spending, not taxation itself.

Theories on taxation[link]

Laffer curve[link]

In economics, the Laffer curve is a theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity (that taxable income will change in response to changes in the rate of taxation). The curve is constructed by thought experiment. First, the amount of tax revenue raised at the extreme tax rates of 0% and 100% is considered. It is clear that a 0% tax rate raises no revenue, but the Laffer curve hypothesis is that a 100% tax rate will also generate no revenue because at such a rate there is no longer any incentive for a rational taxpayer to earn any income, thus the revenue raised will be 100% of nothing. If both a 0% rate and 100% rate of taxation generate no revenue, it follows from the extreme value theorem that there must exist at least one rate in between where tax revenue would be a maximum. The Laffer curve is typically represented as a graph which starts at 0% tax, zero revenue, rises to a maximum rate of revenue raised at an intermediate rate of taxation and then falls again to zero revenue at a 100% tax rate.

One potential result of the Laffer curve is that increasing tax rates beyond a certain point will become counterproductive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are sometimes controversial. The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.^[51]

Optimal tax[link]

Most governments take revenue which exceeds that which can be provided by non-distortionary taxes or through taxes which give a double dividend. Optimal taxation theory is the branch of economics that considers how taxes can be structured to give the least deadweight costs, or to give the best outcomes in terms of social welfare. The Ramsey problem deals with minimizing deadweight costs. Because deadweight costs are related to the elasticity of supply and demand for a good, it follows that putting the highest tax rates on the goods for which there is most inelastic supply and demand will result in the least overall deadweight costs. Some economists sought to integrate optimal tax theory with the social welfare function, which is the economic expression of the idea that equality is valuable to a greater or lesser extent. If individuals experience diminishing returns from income, then the optimum distribution of income for society involves a progressive income tax. Mirrlees optimal income tax is a detailed theoretical model of the optimum progressive income tax along these lines. Over the last years the validity of the theory of optimal taxation was discussed by many political economists. Canegrati (2007) demonstrated that if we move from the assumption that governments do not maximise the welfare of society but the probability of winning elections, the tax rates in equilibrium are lower for the most powerful groups of society, instead of being the lowest for the poorest as in the optimal theory of direct taxation developed by Atkinson and Joseph Stiglitz. See Canegrati's formulae.

See also[link]

By country or region[link]

Notes[link]

External links[link]

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• OECD tax statistics

Lionel Messi

Messi playing for Barcelona
Personal information
Full name	Lionel Andrés Messi[1]
Date of birth	(1987-06-24) 24 June 1987 (age 25)[1]
Place of birth	Rosario, Argentina[1]
Height	1.69 m (5 ft 7 in)[1]
Playing position	Forward
Club information
Current club	Barcelona
Number	10
Youth career
1995–2000	Newell's Old Boys
2000–2003	Barcelona
Senior career*
Years	Team	Apps†	(Gls)†
2003–2004	Barcelona C	8	(5)
2004–2005	Barcelona B	22	(6)
2004–	Barcelona	214	(169)
National team‡
2005	Argentina U20	16	(11)
2008	Argentina U23	5	(2)
2005–	Argentina	68	(22)
Honours Competitor for  Argentina Men's Football Gold 2008 Beijing Team Competition
* Senior club appearances and goals counted for the domestic league only and correct as of 22:30, 13 May 2012 (UTC). † Appearances (Goals). ‡ National team caps and goals correct as of 19:30, 24 March 2012 (UTC)

Lionel Andrés Messi (Spanish pronunciation: [ljoˈnel anˈdɾes ˈmesi], born 24 June 1987) is an Argentine footballer who plays in La Liga for FC Barcelona and is the captain of the Argentina national team, mainly as a forward.

By the age of 21, Messi had received Ballon d'Or and FIFA World Player of the Year nominations. The following year in 2009 he won both the Ballon d'Or^[2] and FIFA World Player of the Year, and won the inaugural FIFA Ballon d'Or in 2010 and 2011.^[3] He also won the 2010–11 UEFA Best Player in Europe Award. Messi is the fourth football player to win three Ballons d'Or, after Johan Cruyff, Michel Platini and Marco van Basten and the second player to win three consecutive Ballons d'Or, after Michel Platini. His playing style and small stature have drawn comparisons to Diego Maradona, who himself declared Messi as his "successor".^[4][5]

Messi has won five La Liga titles and three Champions League titles. In 2012, Messi made UEFA Champions League history by becoming the first player to score five goals in one match, in a 7–1 win against Bayer Leverkusen.^[6] With two goals in the next round against A.C. Milan, he matched José Altafini's record of 14 goals in a single UEFA Champions League/European Cup season.^[7] He also became the first player to top-score in four successive European Champion Clubs' Cup campaigns.^[8][9] He set the world record for most goals scored in a season during the 2011–12 season, with 73 goals.^[10]

Messi was the top scorer of the 2005 FIFA World Youth Championship with six goals. In 2006, he became the youngest Argentine to play in the FIFA World Cup and he won a runners-up medal at the Copa América tournament the following year. In 2008, he won his first international honour, an Olympic gold medal, with the Argentina Olympic football team.

Early life[link]

Messi was born in Rosario, Santa Fe Province, to parents Jorge Horacio Messi, a factory steel worker, and Celia María Cuccittini, a part-time cleaner.^{[11][12][13][14]} His paternal family originates from the Italian city of Ancona, from which his ancestor, Angelo Messi, emigrated to Argentina in 1883.^[15][16] He has two older brothers, Rodrigo and Matías, and a sister, María Sol.^[17] At the age of five, Messi started playing football for Grandoli, a local club coached by his father Jorge.^[18] In 1995, Messi switched to Newell's Old Boys who were based in his home city Rosario.^[18] At the age of 11, he was diagnosed with a growth hormone deficiency.^[19] Local powerhouse River Plate showed interest in Messi's progress, but did not have enough money to pay for treatment for his condition, which cost $900 a month.^[14] Carles Rexach, the sporting director of FC Barcelona, had been made aware of his talent as Messi had relatives in Lleida, Catalonia, and Messi and his father were able to arrange a trial with the team.^[14] Rexach, with no other paper at hand, offered Messi a contract written on a paper napkin.^[20][21] Barcelona offered to pay for Messi's medical bills if he was willing to move to Spain. Messi and his father moved to Barcelona where Messi enrolled in the club's youth academy.^[18][21]

Club career[link]

Barcelona[link]

Messi played in Barcelona's junior Infantil B and Cadete B & A teams from 2000 to 2003 (scoring 37 goals in 30 matches in Cadete A). Season 2003–04 saw him on a record^[22] five different teams: He started one match in Juvenil B (one goal) and got promoted to Juvenil A (14 matches, 21 goals). Later he debuted for FC Barcelona C team (Tercera División) on 29 November 2003 and for FC Barcelona B (Segunda División B) on 6 March 2004. He played for both teams during the season (eight matches, five goals and five games, zero goals, respectively).^[23][24][25] Even before these two debuts, Messi made his official debut for the first-team on 16 November 2003 aged 16 years and 145 days, in a friendly match against Porto.^[26][27]

Less than a year after his start, Frank Rijkaard gave him his league debut against RCD Espanyol on 16 October 2004 (at 17 years and 114 days), becoming the third-youngest player ever to play for Barcelona and youngest club player who played in La Liga, which would be broken by Bojan Krkić in September 2007. When he scored his first senior goal for the club against Albacete Balompié on 1 May 2005, Messi was 17 years, ten months and seven days old, becoming the youngest to ever score in a La Liga game for Barcelona^[28] until it was again broken by Bojan Krkić in 2007, scoring from a Messi assist.^[29] Messi said about his ex-coach Rijkaard: "I'll never forget the fact that he launched my career, that he had confidence in me while I was only sixteen or seventeen."^[30] During the season, Messi played also in Barcelona B (Segunda División B) scoring 6 goals in 17 matches.

2005–06 season[link]

On 16 September, for the second time in three months, Barcelona announced an update to Messi's contract; this time it was improved to pay him as a first team member and extended until June 2014.^[18] Messi obtained Spanish citizenship on 26 September 2005^[31] and was finally able to make his debut in the season's Spanish First Division. Messi's first home outing in the Champions League came on 27 September against Italian club Udinese.^[26] Fans at Barcelona's stadium, the Camp Nou, gave Messi a standing ovation upon his substitution, as his composure on the ball and passing combinations with Ronaldinho had paid dividends for Barcelona.^[32]

Messi netted six goals in 17 league appearances, and scored one Champions League goal in six. His season ended prematurely on 7 March 2006, however, when he suffered a muscle tear in his right thigh during the second leg of the second round Champions League tie against Chelsea.^[33] Rijkaard's Barcelona ended the season as champions of Spain and Europe.^[34][35]

2006–07 season[link]

Messi in a match against Rangers in 2007

In the 2006–07 season, Messi established himself as a regular first team player, scoring 14 times in 26 matches.^[36] On 12 November, in the game against Real Zaragoza, Messi suffered a broken metatarsal, ruling him out for three months.^[37][38] On 11 March, El Clásico saw Messi in top form, scoring a hat-trick to earn 10-man Barcelona a 3–3 draw, equalising three times, with the final equaliser coming in injury time.^[39] In doing so he became the first player since Iván Zamorano (for Real Madrid in the 1994–95 season) to score a hat-trick in El Clásico.^[40] Messi is also the youngest player ever to have scored in this fixture. Towards the end of the season he began finding the net more often; 11 of his 14 league goals for the season came from the last 13 games.^[41]

Messi shortly before scoring a goal against Getafe

Messi also proved the "new Maradona" tag was not all hype, by nearly replicating Maradona's most famous goals in the space of the single season.^[42] On 18 April 2007, he scored two goals during a Copa del Rey semi-final against Getafe CF, one of which was very similar to Maradona's famous goal against England at the 1986 World Cup in Mexico, known as the Goal of the Century.^[43] The world's sports press drew comparisons with Maradona, and the Spanish press labelled Messi as "Messidona".^[44] He ran about the same distance, 62 metres (203 ft), beat the same number of players (six, including the goalkeeper), scored from a very similar position, and ran towards the corner flag just as Maradona did in Mexico 21 years before.^[42] In a press conference after the game, Messi's team-mate Deco said: "It was the best goal I have ever seen in my life."^[45] Against RCD Espanyol Messi also scored a goal which was remarkably similar to Maradona's 'Hand of God' goal against England in the World Cup quarter-finals. Messi launched himself at the ball and connected with his hand to guide the ball past the goalkeeper Carlos Kameni.^[46] Despite protests by Espanyol players and replays showing it was clear handball, the goal stood.^[46]

2007–08 season[link]

Messi takes Barcelona to 2–0 against Sevilla at Camp Nou on 22 September 2007

On 27 February, Messi played in his 100th official match for Barcelona against Valencia.^[47]

Messi was nominated for a FIFPro World XI Player Award under the category of Forward.^[48] A poll conducted in the online edition of the Spanish newspaper Marca had him as the best player in the world with 77 percent of the vote.^[49] Columnists from Barcelona-based newspapers El Mundo Deportivo and Sport stated that the Ballon d'Or should be given to Messi, a view supported by Franz Beckenbauer.^[50] Football personalities such as Francesco Totti have declared that they consider Messi to be one of the current best footballers in the world.^[51]

Messi was sidelined for six weeks following an injury on 4 March when he suffered a muscle tear in his left thigh during a Champions League match against Celtic. It was the fourth time in three seasons that Messi suffered this type of injury.^[52] When the season was over Messi managed to score 16 goals and assisted 13 times in all competition.

2008–09 season[link]

Upon Ronaldinho's departure from the club, Messi inherited his number 10 jersey.^[53] During this season he placed second in the 2008 FIFA World Player of the Year awards with 678 points.

Michael Carrick defending a shot from Messi in the 2009 UEFA Champions League Final

Messi scored his first hat-trick of 2009 in a Copa del Rey tie against Atlético Madrid which Barcelona won 3–1.^[54] Messi scored another important double on 1 February 2009, coming on as a second half substitute to help Barcelona defeat Racing Santander 1–2 after being 1–0 down. The second of the two strikes was Barcelona's 5000th league goal.^[55] On 8 April 2009, he scored twice against Bayern Munich in the Champions League, setting a personal record of eight goals in the competition.^[56]

As Barcelona's season was drawing to a close, Messi scored twice (his 35th and 36th goals in all competitions) to cap a 6–2 win over Real Madrid at the Santiago Bernabéu^[57] in what was Real's heaviest defeat since 1930.^[58] He won his first Copa del Rey on 13 May, scoring one goal and assisting another two, in a 4–1 victory over Athletic Bilbao.^[59] He helped his team win the double by winning La Liga. On 27 May he helped Barcelona win the Champions League by scoring a second goal in the 70th minute giving Barcelona a two goal lead; he also became the top scorer in the Champions League, the youngest in the tournament's history, with nine goals.^[60] Messi also won the UEFA Club Forward of the Year: and the UEFA Club Footballer of the Year rounding off a spectacular year in Europe.^[61] This victory meant Barcelona had won the Copa del Rey, La Liga and Champions League in the one season,^[62] and was the first time a Spanish club had ever won the treble.^[63]

2009–10 season[link]

After winning the 2009 UEFA Super Cup, Barcelona manager Josep Guardiola asserted that Messi was probably the best player he had ever seen.^[65] On 18 September, Messi signed a new contract with Barcelona, running until 2016 and with a buy-out clause of €250 million included, making Messi, along with Zlatan Ibrahimović, the highest paid players in La Liga, with earnings of around €9.5 million yearly.^[66][67]

Messi was named winner of the 2009 Ballon d'Or on 1 December 2009, beating runner-up Cristiano Ronaldo by largest ever margin of 473 to 233.^[68][69][70]

Messi at the 2009 FIFA Club World Cup

On 19 December, Messi scored the winner in the final of the 2009 Club World Cup against Estudiantes in Abu Dhabi, giving the club their sixth title of the year.^[71] Two days later, he was given the FIFA World Player of the Year award,^[72] beating Cristiano Ronaldo, Xavi, Kaká and Andrés Iniesta to the award. This was the first time he had won the award, and he became the first Argentinian to ever receive this honour.^[73] On 10 January 2010, Messi scored his first hat-trick in 2010 and his first hat-trick of the season against CD Tenerife in the 0–5 victory,^[74] and on 17 January he scored his 100th goal for the club in the 4–0 victory over Sevilla.^[75]

Messi scored a hat-trick against Valencia CF in a 3–0 home win,^[76] and finally he scored another hat-trick against Zaragoza in a 4–2 away win,^[77] becoming the first Barcelona player to score back-to-back hat-tricks in La Liga.^[78] He played his 200th official match for Barcelona against Osasuna on 24 March 2010.^[79]

On 6 April 2010, for the first time in Messi's career he scored four goals in a single match, netting the lot in a 4–1 home win over Arsenal in the Champions League quarter-final second leg.^[82][83] This also saw him overtake Rivaldo as Barcelona's all time greatest scorer in the competition.^[84] In the final league match of the season against Valladolid, he scored two goals in the second half to tie Ronaldo's club record of 34 goals in a single league season, set in 1996–97,^[85][86] and to finish four goals behind the all-time record held by Telmo Zarra.^[87] He was named La Liga player of the year for the second year in a row on 3 June 2010.^[88]

2010–11 season[link]

On 21 August 2010, Messi scored a hat-trick in his first start of the season in a 4–0 victory over Sevilla FC in the Supercopa de España, helping Barcelona secure their first trophy of the season after a 1–3 first leg loss.^[89]

On 19 September 2010, Messi suffered an ankle injury due to an ill-advised tackle by Atlético Madrid defender Tomáš Ujfaluši in the 92nd minute of their Round 3 match at the Vicente Calderón Stadium. At first sight it was feared that Messi suffered a broken ankle that could have kept the star player away from the pitch for a minimum of six months, but MRI performed the next day in Barcelona showed he suffered a sprain in the internal and external ligaments of his right ankle.^[90] Team-mate David Villa stated "the tackle on Messi was brutal" after watching the video of the play and also added that he believed the Atlético defender "didn't go into the tackle to hurt".^[91] The incident caused widespread media attention and brought up the debate of equality in protecting all players in the game.

Against Almería Messi scored his second hat-trick of the season in an impressive 8–0 away win, the second of which was his 100th La Liga goal.^[92]

Messi playing against Real Madrid in a Champions League match

Messi won the 2010 FIFA Ballon d'Or, beating his Barcelona teammates Xavi and Iniesta.^[93] Messi had been nominated for the awards for the fourth consecutive year.^[94] On 5 February, Barcelona broke the record for most consecutive league wins with 16 victories after they defeated Atlético Madrid 3–0 at the Camp Nou.^[95] Lionel Messi scored a hat-trick to ensure the victory for his side and after the match he stated, "it's an honor to be able to pass a record set by a great like Di Stéfano" and "if the record has been around for so long is because it's very complicated to achieve and we have reached it by defeating a very difficult team who's going through a bad situation, which makes it even more difficult."^[96]

After failing to score for a month he scored a brace against UD Almería; the second goal was his 47th of the season, equalling his club record return of the previous season.^[97] He surpassed his record on 12 April 2011 by scoring the winner against Shakhtar Donetsk in a UEFA Champions League game, which put him in the record book as all time top scorer in a single season for Barcelona.^[98] He scored his eighth goal on El Clásico on a 1–1 tie at the Santiago Bernabéu Stadium. On 23 April, Messi scored his 50th goal of the season against CA Osasuna in a 2–0 home victory which he came on as a substitute in the 60th minute.^[99] He finished the season by winning La Liga and scoring 31 goals.

On 20 April, Barcelona were defeated by arch-rivals Real Madrid in the 2011 Copa del Rey Final. Messi set up a goal for Pedro, which was however ruled offside. Cristiano Ronaldo scored the only goal of the match in extra time. Messi was however the joint top-scorer of the tournament along with Cristiano Ronaldo, with 7 goals.^{[100] [101][101]}

In the first leg of the Champions League semi-finals, he gave a memorable performance, scoring twice against Real Madrid in a 2–0 win, the second goal (a dribble past several players) being acclaimed as one of the best ever at that stage of the competition.^[102][103] At the Champions League Final at Wembley, Messi scored the eventual game-clinching goal to give Barcelona their third title in six years and fourth overall.^[104] This was also Messi's 12th goal in the Champions League that season, which allowed him to tie Ruud Van Nistelrooy's record of 12 goals in a single European Cup season, after it was re-established as the UEFA Champions League, in 1992.^[101] The overall record of goals scored in a single European Cup Season, is José Altafini's record of 14 goals, which Messi did however equal in the following season.^[101] Messi finished the 2010-11 season with 53 goals in all competitions.

2011–12 season[link]

Messi started the season by lifting the Spanish Supercup with Barcelona, scoring three goals and providing two assists in a 5–4 aggregate win against Real Madrid.^[105] His vital interventions continued in the next official match played against Porto when he scored again following a weak back pass from Fredy Guarín before setting up Cesc Fàbregas to give Barcelona a 2–0 victory and the UEFA Super Cup,^[106] then the only official competition that remained for him to score in.^[107]

After scoring his first goal of an eventual hat-trick in an 8–0 rout against Osasuna, Messi produced a special celebration for Soufian, a 10-year-old Moroccan boy with Laurin Sandrow syndrome, a rare medical condition that can eventually lead to the loss of the lower extremities. Whilst Messi usually points to the sky after scoring a goal, Messi slapped his thighs as a dedication to Soufian.^[108]

In August, Messi became the second highest goalscorer surpassing László Kubala on 194 goals, being behind only to César Rodríguez on 232 goals in all official competitions.^[109]

On 28 September, Messi scored his first two Champions League goals of the season against BATE Borisov,^[110] becoming Barcelona's second highest goalscorer in its history, tying László Kubala, at 194 goals in all official competitions.^[111] He surpassed that record when he scored two goals against Racing Santander.^[112] He became second in Barcelona's La Liga goalscorers list with 132 goals, one more than Kubala.^[113] He scored his 200th Barcelona goal and two more as part of a hat-trick in his next game against Viktoria Plzeň in the Champions League.^[114]

Messi scored a brace in the Club World Cup Final against Santos and was recognized as the man of the match and also awarded the Golden Ball for his performance during the tournament.^[115]

Messi won the 2011 UEFA Best Player in Europe Award, beating his Barcelona team-mate Xavi Hernández and Real Madrid's Cristiano Ronaldo. Messi won the 2011 FIFA Ballon d'Or, again beating his team-mate Xavi and Cristiano Ronaldo. By winning the FIFA Ballon d'Or again, Messi become the fourth player to win three Ballon d'Ors, after Johan Cruyff, Michel Platini and Marco Van Basten and the second player to win three consecutive Ballon d'Ors, after Michel Platini (although two of his Ballon d'Ors are FIFA Ballon d'Ors, which he won consecutively).

On 19 February 2012, Messi, on his 200th La Liga appearance, scored four goals against Valencia in a 5–1 win.^[116] On 7 March, Messi became the first player to score five goals in an UEFA Champions League match since the tournament's re-establishment in 1992, helping the defending champions Barcelona win 7–1 against Bayer Leverkusen.^[117]

On 20 March, Messi scored three goals against Granada, making him FC Barcelona's leading goalscorer in official competitions, surpassing club legend César Rodríguez, who had previously held the record with 232.^[118]

On 3 April, Messi scored two goals from penalty kicks against Milan in the second leg of the Champions League Quarter-final, allowing him to surpass his personal record, joint with Ruud van Nistelrooy, of 12 goals in a single UEFA Champions League season. These goals allowed him to tie José Altafini's record of 14 goals in a single European Cup season in the 1962–63 season, before the tournament's re-establishment as the UEFA Champions League in 1992.^[101] Barcelona were knocked out in the semi-finals to eventual winners Chelsea.

On 11 April, Messi scored his 61th goal against Getafe, surpassing Isidro Langara's record of 60 goals in 1933–34, and became the best goalscorer in history in one season in Spain.^{[citation needed]}

On 2 May, Messi scored a hat-trick against Málaga surpassing Gerd Müller's record (67 goals in 1972-73) with 68 goals, and thus becoming the best goalscorer in history in one season in Europe.^[119] It was the 21st multi-goal game of the season for Messi and his seventh La Liga hat-trick.^[120] He then scored four goals on 5 May against Espanyol to take his tally to an unprecedented 72 goals, in the process becoming only the second player to pass 70 goals in a first division season since Archie Stark of Bethlehem Steel in the American Soccer League in 1924–25.^[121]

On 25 May, he scored again in the 2012 Copa del Rey Final, helping Barcelona win their 26th Spanish Cup title, and increasing his seasonal goalscoring record to an unmatched 73 goals in all competitions.^{[122] [123]} This was also Guardiola's last match as Barcelona's manager, and the Cup win marked Messi's second Copa del Rey title, after losing the final the year before, as well as his 14th Barcelona trophy during Guardiola's 4 seasons at the club. Although Barcelona failed to win their 4th consecutive Liga title under Guardiola, finishing runners up to arch-rivals Real Madrid, Messi finished the 2011–12 season as the top goalscorer in La Liga for a second time, with a Liga record of 50 goals. He also ended the season as the UEFA Champions' League Top Scorer for a fourth consecutive time, with 14 goals.^[124]

International career[link]

Often referred to as an Argentinian-Spanish player, this crossover was brought into sharp focus when in 2004, Lionel was offered the chance to play for the Spanish national U-20 team. He declined the offer given his Argentinian heritage, and was given the opportunity to play for Argentina's U-20 team in a friendly match against Paraguay in June 2004.^[125] In 2005 he was part of a team that finished 3rd in 2005 South American Youth Championship in Colombia. He won the 2005 FIFA World Youth Championship in the Netherlands with the team and won the Golden Ball and the Golden Shoe,^[126] scoring in the last four of Argentina's matches and netting a total of six for the tournament.

He made his full international debut on 17 August 2005 against Hungary at the age of 18. He was substituted on during the 63rd minute, but was sent off on the 65th minute because the referee, Markus Merk, claimed that Messi had allegedly elbowed defender Vilmos Vanczák, who was tugging Messi's shirt. The decision was contentious and Maradona even claimed the decision was pre-meditated. Messi was later reportedly found weeping in the changing rooms after the decision.^[127][128] Messi returned to the team on 3 September in Argentina's 1–0 World Cup qualifier away defeat to Paraguay. Ahead of the match he had said "This is a re-debut. The first one was a bit short."^[129] He then started his first game for Argentina against Peru, in which he was able to win a crucial penalty for Argentina; after the match Pekerman described Messi as "a jewel".^[130]