Tax Base

A tax base is comprised of or refers to the assessed value of a set of assets, or the income stream generated by assets or investments. Stated another way, a pool of taxable assets or investments represent a tax base. All the houses in a town or city, and any other taxable real estate, collectively form that municipality's property tax base. All the residents, businesses, and taxable assets in a state comprise the state's tax base, as do all residents, businesses, and taxable assets of a nation. The tax base expands when the population of a municipality, state, or nation grows, or when new businesses start up or existing businesses expand. When businesses shrink or close down, or people move away from a city, state, or nation, the tax base diminishes. In an effort to increase collected revenues, governing entities therefore often try to expand their tax base by offering a range of incentives to attract business and residents.