Tax
Tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.
Types of Taxes[edit | edit source]
There are several types of taxes, including income tax, property tax, goods and services tax (GST), and value-added tax (VAT).
Income Tax[edit | edit source]
Income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.
Property Tax[edit | edit source]
A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county or geographical region, or a municipality.
Goods and Services Tax (GST)[edit | edit source]
Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. It is paid by the consumers, but it is remitted to the government by the businesses selling the goods and services.
Value-Added Tax (VAT)[edit | edit source]
A value-added tax (VAT) is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer.
Tax Evasion and Avoidance[edit | edit source]
Tax evasion is an illegal practice where a person, organization or corporation intentionally avoids paying their true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties. Tax avoidance, on the other hand, is not necessarily illegal, but the practices that are used to avoid paying a full tax liability are often seen as being unethical.
See Also[edit | edit source]
- Tax law
- Tax policy
- Tax reform
- Tax resistance
- Taxation in the United States
- Taxation in the United Kingdom
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