The Tax Research glossary seeks to explain the terms used on this blog that refer to more technical aspects of economics, accounting and tax. It recognises that understanding these terms is critical to understanding the economic issues that affect us all the time.

Like the rest of the Tax Research blog, this glossary is written by Richard Murphy unless there is a note to the contrary. It is normative approach and reflects post-Keynesian, heterodox economic opinion with a bias towards modern monetary theory. The fact that many items in that sentence are hyperlinked shows that they are explained in the glossary.

The copyright notices pertaining to the Tax Research blog apply to this glossary.

The glossary is designed to achieve three goals:

  • It seeks to provide a short, hopefully straightforward, definition of what a term might mean.
  • It then seeks, when appropriate, to explain what the term means within the context in which it is used. This is meant to elaborate the definition to add to understanding.
  • It then critiques the term, explaining, if appropriate, what the weaknesses inherent in the term or the situation it describes are. The aim here is to empower the reader to understand the issues behind the nonsense that most professions create around their activity to provide them with a mystique that they rarely deserve and which often hides what they are really up to.

The glossary is not complete. It will grow over time. If you think there are entries that need adding please let me know by emailing Please also feel free to suggest edits. The best way to do this is to copy an entry into Word and then send me a track-changed document indicating the changes that you suggest.

Because of the way in which it is coded this glossary automatically cross refers entries within itself and to the blog that it supports and within the glossary itself but if you think a link is missing please let me know.

Finally, if you like this glossary then you might like to buy me a coffee. It has required the support of a fair few to write it. You can do so here.

Glossary Entries

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Facilitation payment

A facilitation payment is a bribe designed to quicken the pace at which an official performs a routine, non-discretionary action, sometimes also referred to as a “grease payment.”

Facilitation payments are legal under the Foreign Corrupt Practices Act but not under the OECD Anti-Bribery Convention or the vast majority of anti-bribery statutes around the world.

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Fascism is nationalism promoted by populism with hatred driving the political narrative.

Amorphous as it is, fascism is easy, hence its appeal. Simple slogans devoid of much meaning promote ideas based on division within society, whether real or imagined, and power for those leading the chant results.

It is democracy that is hard, and it must be ever-vigilant about the threat fascism poses.


Defining fascism is challenging for three reasons.

The first is that unlike, for example, communists, fascists have been very reluctant to use the term to describe themselves. That means that even agreeing on which groups are fascist is open to controversy.

Second, those groups which have been described as fascist are not all consistent in their attitudes or behaviour. This inconsistency has to be dealt with as a consequence.

The third reason is that the term is usually actively resisted by those to whom it is applied. Rather as one of the surest signs that a place is a tax haven is its vehement denial that it is a tax haven, so is it the case that a group that appears fascist in inclination is absolutely vehement in its denial of the fact. It is, in fact, commonplace for those accused of being fascist to use DARVO (deny, attack, and reverse victim and offender) gaslighting techniques on those accusing them of being so.

In this situation definitions of fascism have either to be broadly based or describe the common characteristics of the groups that are suggested to be fascist in orientation.

One broadly based definition is that fascism is a genus of political ideology whose mythic core in its various permutations is a palingenetic form of populist ultra-nationalism where palingenetic refers to the revival or rebirth of a national spirt, culture and religion in society. The essence is clear: the idea of national superiority to the exclusion of others is promoted by populist means.

The Cambridge Dictionary defines fascism as ‘a political system based on a very powerful leader, state control, and being extremely proud of country and race, and in which political opposition is not allowed'.

McGill University, in its Wikispeedia, has defined fascism as ‘a radical political ideology that combines elements of corporatism, authoritarianism, nationalism, militarism, anti-liberalism and anti-communism'. Doing so, it moves from being broadly based towards listing characteristics.

The most commonly quoted of these lists of characteristics was developed by Umberto Eco in an article entitled Ur-Fascism for the New York Review of Books in 1995. This list has been summarised in various ways, this being one of them:

  1. The cult of tradition. “One has only to look at the syllabus of every fascist movement to find the major traditionalist thinkers. The Nazi gnosis was nourished by traditionalist, syncretistic, occult elements.”
  2. The rejection of modernism. “The Enlightenment, the Age of Reason, is seen as the beginning of modern depravity. In this sense Ur-Fascism can be defined as irrationalism.”
  3. The cult of action for action's sake. “Action being beautiful in itself, it must be taken before, or without, any previous reflection. Thinking is a form of emasculation.”
  4. Disagreement is treason. “The critical spirit makes distinctions, and to distinguish is a sign of modernism. In modern culture the scientific community praises disagreement as a way to improve knowledge.”
  5. Fear of difference. “The first appeal of a fascist or prematurely fascist movement is an appeal against the intruders. Thus Ur-Fascism is racist by definition.”
  6. Appeal to social frustration. “One of the most typical features of the historical fascism was the appeal to a frustrated middle class, a class suffering from an economic crisis or feelings of political humiliation, and frightened by the pressure of lower social groups.”
  7. The obsession with a plot. “Thus at the root of the Ur-Fascist psychology there is the obsession with a plot, possibly an international one. The followers must feel besieged.”
  8. The enemy is both strong and weak. “By a continuous shifting of rhetorical focus, the enemies are at the same time too strong and too weak.”
  9. Pacifism is trafficking with the enemy. “For Ur-Fascism there is no struggle for life but, rather, life is lived for struggle.”
  10. Contempt for the weak. “Elitism is a typical aspect of any reactionary ideology.”
  11. Everybody is educated to become a hero. “In Ur-Fascist ideology, heroism is the norm. This cult of heroism is strictly linked with the cult of death.”
  12. Machismo and weaponry. “Machismo implies both disdain for women and intolerance and condemnation of nonstandard sexual habits, from chastity to homosexuality.”
  13. Selective populism. “There is in our future a TV or Internet populism, in which the emotional response of a selected group of citizens can be presented and accepted as the Voice of the People.”
  14. Ur-Fascism speaks Newspeak. “All the Nazi or Fascist schoolbooks made use of an impoverished vocabulary, and an elementary syntax, in order to limit the instruments for complex and critical reasoning.”

This list is not the same as that published later by Laurence Britt in 2003:

  1. Powerful and Continuing Nationalism
    Fascist regimes tend to make constant use of patriotic mottos, slogans, symbols, songs, and other paraphernalia. Flags are seen everywhere, as are flag symbols on clothing and in public displays.
  2. Disdain for the Recognition of Human Rights
    Because of fear of enemies and the need for security, the people in fascist regimes are persuaded that human rights can be ignored in certain cases because of "need." The people tend to look the other way or even approve of torture, summary executions, assassinations, long incarcerations of prisoners, etc.
  3. Identification of Enemies/Scapegoats as a Unifying Cause
    The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: racial , ethnic or religious minorities; liberals; communists; socialists, terrorists, etc.
  4. Supremacy of the Military
    Even when there are widespread domestic problems, the military is given a disproportionate amount of government funding, and the domestic agenda is neglected. Soldiers and military service are glamorized.
  5. Rampant Sexism
    The governments of fascist nations tend to be almost exclusively male-dominated. Under fascist regimes, traditional gender roles are made more rigid. Opposition to abortion is high, as is homophobia and anti-gay legislation and national policy.
  6. Controlled Mass Media
    Sometimes to media is directly controlled by the government, but in other cases, the media is indirectly controlled by government regulation, or sympathetic media spokespeople and executives. Censorship, especially in war time, is very common.
  7. Obsession with National Security
    Fear is used as a motivational tool by the government over the masses.
  8. Religion and Government are Intertwined
    Governments in fascist nations tend to use the most common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology is common from government leaders, even when the major tenets of the religion are diametrically opposed to the government's policies or actions.
  9. Corporate Power is Protected
    The industrial and business aristocracy of a fascist nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.
  10. Labor Power is Suppressed
    Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated entirely, or are severely suppressed .
  11. Disdain for Intellectuals and the Arts
    Fascist nations tend to promote and tolerate open hostility to higher education, and academia. It is not uncommon for professors and other academics to be censored or even arrested. Free expression in the arts is openly attacked, and governments often refuse to fund the arts.
  12. Obsession with Crime and Punishment
    Under fascist regimes, the police are given almost limitless power to enforce laws. The people are often willing to overlook police abuses and even forego civil liberties in the name of patriotism. There is often a national police force with virtually unlimited power in fascist nations.
  13. Rampant Cronyism and Corruption
    Fascist regimes almost always are governed by groups of friends and associates who appoint each other to government positions and use governmental power and authority to protect their friends from accountability. It is not uncommon in fascist regimes for national resources and even treasures to be appropriated or even outright stolen by government leaders.
  14. Fraudulent Elections
    Sometimes elections in fascist nations are a complete sham. Other times elections are manipulated by smear campaigns against or even assassination of opposition candidates, use of legislation to control voting numbers or political district boundaries, and manipulation of the media. Fascist nations also typically use their judiciaries to manipulate or control elections.

Neither list is perfect. It is also not true that all characteristics need be found for fascism to be identified. Precisely because fascism is amorphic the lists should be seen as indicative. They are, nonetheless, considered helpful in association with the more broadly based definitions.

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Fiat currency

Fiat money is the currency of a country that is declared to be the legal tender of that jurisdiction by its government.

A fiat currency has status as legal tender as a result of legal declaration, and nothing else. It is not backed by any physical commodity or asset, such as gold or silver.

It is important to note that ‘fiat' in this context means ‘by decree', or by law. It has nothing to do with a car company many more people will have heard of.

The value of a fiat currency is determined nationally by the ability of the country that declares it to be legal tender to impose taxes on its population and to then collect them.

In a world dominated by the idea that governments cannot do anything for those that they govern. The ability to declare a currency is legal tender and to then enforce that through the state's power to tax is the ultimate expression of statehood and sovereignty.  In itself, this confronts neoliberal dogma. 

Internationally, the value of a fiat currency is determined by the relative trading strength of the country that issues it, and its perceived political stability, although short-term variations in the value of a currency might arise for speculative reasons.

Since the United States abandoned the gold standard in 1971, almost all the world's currencies are fiat currencies.

Since a fiat currency can ultimately only be created by a government it is government expenditure funded by the government of a jurisdiction borrowing from its central bank that gives rise to the creation of all fiat currency.

Taxation exists to withdraw the fiat currency that a government has put into circulation through it expenditure from circulation to the extent that is considered necessary to control the risk of inflation arising (see reasons to tax).

In a fiat currency system, government expenditure, the scale of a government deficit,  taxation, and the control of inflation (see separate entries) are as a consequence all intimately related issues.  This makes the artificial disaggregation of macroeconomic policy into fiscal policy and monetary policy deeply harmful to the overall control of the economy of a jurisdiction by its government.

A proper understanding of fiat money also puts it at the heart of macroeconomics, when at present it is treated as peripheral to that subject by neoclassical economics, or is even ignored by it.

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Financial Action Task Force

The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. The FATF has published more than 40 Recommenda­tions in order to meet this objective.

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Financial Flows

In the context of taxation, this term usually refers to the transfer of funds across international borders.

The term financial flows is usually used within the context of the term illicit financial flows. These are international payments of money across international borders where the source of the payment was illegal or the result of the abuse of the law (e.g. by tax evasion activity) of one or both jurisdictions involved, or those of another state associated with the payment or where the payment itself creates such consequence.

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Fiscal choices

Politicians like to claim that there are fiscal rules  that they must follow. There are, in fact, no such thing as fiscal rules. Every fiscal rule has been created by a politician in an attempt to demonstrate their own supposed competence in managing the economy for which they are responsible.

When, as is often the case, a politician discovers that this supposed demonstration of competence is not possible because outcomes conflict with what they predicted and their rule is at risk of being broken they have a habit of rewriting declare rules to suit the new circumstances that have arisen. They then use this new rule as the basis of their claim to competence in the future even though they have failed to meet their own rules in the past.

All fiscal rules are in that case actually fiscal choices rather than rules. The suggestion by politicians that they have no choice but follow these rules is, in that case, misleading. The reality is that they have chosen to do so. They  could just as easily have chosen some other objective instead.

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Fiscal policy

Fiscal policy is a term used to describe one of the two most common approaches adopted by a government towards macroeconomic management of the economy for which they are responsible, the other being monetary policy.

Fiscal policy uses the management of government expenditure and taxation income to, in combination, either stimulate or suppress economic activity within a jurisdiction.

Based upon the ideas of the 20th-century British economist, Lord John Maynard Keynes, fiscal policy suggests that if a government wishes to stimulate economic activity because, for example, there is significant unemployment or under-employment in a jurisdiction, then it will spend more money into the economy than it raises in taxation revenue, with the reverse being true if it wishes to suppress activity because, for example, it thinks markets are overheated and there is a risk of inflation.

The inherent logic implicit in fiscal policy is that government expenditure in excess of government taxation revenue stimulates economic activity whilst this situation persists, with the reverse having a dampening effect on economic activity.

Fiscal policy is finessed by deciding upon the mix between government revenue expenditure, i.e. that which is incurred for immediate purposes, and government capital expenditure, i.e. that which represents investment for long-term benefit. These two types of expenditure tend to have different fiscal multiplier effects, with government capital expenditure usually generating greater long-term taxation benefits for a government than current revenue expenditure does.

Fiscal policy can also be finessed by altering which taxes are increased or lowered within the economy. Reducing taxes on those with the lowest pay tends to have a higher fiscal multiplier effect with, as a result, more and more immediate fiscal policy impact than reducing taxes for those with the highest levels of income and gains does. That is because those with lower incomes tend to spend the benefit of any tax cuts that they receive almost immediately, whilst those with higher incomes and gains tend not to spend the benefit of tax cuts that they enjoy but save them instead, producing, as a result, smaller fiscal multiplier effects. In both cases, the reverse is also true.

As the previous paragraph makes clear, because government expenditure and government taxation revenue are not independent variables because government spending does invariably give rise to activity that is subject to taxation, fiscal policy management can never be a precise science. The resulting imprecision in fiscal policy management is exacerbated by the delay that exists within any economy between the announcement of policy, the undertaking of expenditure, and the consequent changes in taxation revenue. These delays create inherent uncertainty in fiscal policy management.

Keynes created the concept of fiscal policy because he correctly noted that markets do not by themselves, and without government invention, necessarily deliver conditions of full employment in any economy. Keynes thought full employment to be the goal of macroeconomic management, particularly given the experience of economies in the inter-world-war era.

Every modern government of any size does now necessarily consider its fiscal policy when managing its affairs and those of the economy for which it is responsible. Many will, however, also seek to manage the continuing fiscal cycles of relative boom and depression that occur despite their doing so through the use of monetary policy. This seeks to control the scale of short-term economic activity by the use of artificial movements in interest rates set by the government. They do so despite the evidence of the success of monetary policy being limited. In contrast, there can be no doubt that the post-1945 growth in economies around the world has arisen because of the use of fiscal policies and the implicit desire for full employment inherent within it.

This post adds to other glossary entries on:

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Fiscal rules

There are no such things as fiscal rules. There are instead fiscal choices.

However, many politicians, and most especially those who have responsibility for the finances of a jurisdiction, often claim that such rules exist. Those politicians create what they described as fiscal rules to justify the fiscal choices that they have made with regard to the macroeconomic options that are available to them.

So, for example, they might stay that the country for whose finances they are responsible will reduce its ratio of national debt as they define it to GDP  over a defined period of time.

Alternatively, they might claim that over a period time they will ensure that the expenditure of the government for which they are responsible will equal its taxation revenues.

Any politician has the right to suggest that they think such choices are a reasonable course of action for the government of which they are a part to follow, but this does not make them rules that must be followed. Nor are there any such rules that are imposed upon them: they are always a matter of choice.

Even when fiscal rules are elevated to international standards by organisations such as the European Union they still remain a matter of choice that the country that follows them is obliged to do as a consequence of their decision to belong to such an organisation rather than as a matter of any economic standard or law.

Fiscal rules should be seen as a consequence as a narrative that reinforces particular economic choices within the chosen economic framework that a government chooses to follow. They are in this context particularly popular with politicians of neoclassical or neoliberal persuasion because both argue that it is appropriate to restrict the amount of expenditure that a government might undertake, which restriction is a preference of those who follow those narratives. This does not, however, make them an economic necessity. They are always a choice.

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Fiscal space

Fiscal space is the supposed capacity that a government has to increase spending without risking breaking its own fiscal rules or fiscal choices.

Since all fiscal rules are actually fiscal choices and are not in any way binding the argument that there is fiscal space is almost meaningless.

Fiscal space simply means the amount that a Chancellor thinks he or she might spend without threatening their own credibility. Within the actual economy the term is meaningless.

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Fixed Assets

Like all assets, fixed assets represent legal claims to ownership of property that will give rise to a future cash flow benefits for the organisation that owns them.

Fixed assets are those legal claims to own property by a reporting entity which are likely to give rise to a cash flow benefit wholly or partially more than twelve months after the accounting reference date  of that reporting entity in contrast to current assets which are likely to give rise to a benefit in less than twelve months.

Fixed assets can be split between:

  • Tangible assets, which represent physical property such as land and buildings, machinery, vehicles, IT equipment and the like.
  • Intangible assets, which represent legal claims to own potential income streams such as investments, royalties, copyrights and goodwill.

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Flat tax

A tax in which as income increases above an agreed tax free sum the amount of tax paid remains constant in proportion to total income.

Compare with progressive taxes.

The term is usually only applied to income taxes.

Widely considered to be unethical because the marginal capacity to pay such a tax is smaller amongst those with lower income than it is amongst those with higher income.

Proponents of flat taxes always appear to be associated with right wing political thinking.

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Foreign Corrupt Practices Act

A U.S. law passed in 1977 that makes it illegal for U.S. citizens, U.S. corporations and certain non-U.S. corporations to bribe foreign officials.

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Forward guidance

Forward guidance is provided by a central bank on its future expectations for the economy in which it is operating and so on the likely future direction of monetary policy.

The aim is to control and limit expectation and so speculation and so to produce conditions of economic stability by reducing he level of uncertainty within the economy.

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A freeport is designated geographic location or locations within a jurisdiction where some of the normal tax rules of the jurisdiction do not apply e.g. customs or excise duties are suspended or taxes on profit are applied at rates lower than those normally charge and lower land taxes are charged.

Freeports are sometimes called special enterprise zones.

Freeports are usually intended to induce the relocation of economic activity from other countries. They provide light touch regulation in most cases, but they have also attracted criminality and as a result are often criticised by money laundering agencies.

There is little evidence that freeports create growth within jurisdictions even when that is their stated purpose. In many cases they merely relocate jobs within a jurisdiction with the employers of those people relocated securing the benefits of the tax advantages offered. As a result, freeports usually impose a cost on a society that can rarely be justified by any identifiable benefits arising.

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Freezing of Assets

The process by which a person suspected of money laundering may have their assets seized temporarily by the state(s) investigating their affairs to ensure that if the case against them is proven those funds con be either claimed by that state or be returned to those to whom the rightfully belong. See also tracing of assets and seizing of assets.

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Front company

A company that has conducted or is currently conducting some legitimate business in order to hide illicit activity.

For example a front company might be a hand car wash where the owner also acts as a launderer for a drug cartel, moving drug money through the legitimate accounts.

Because laundromats were so often used for this purpose the term ‘money laundering' was invented to describe the process.

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