Income taxes- are governments impose on financial income generated by all entities within their jurisdiction. By law, business and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public. It has two basic types, they are personal income tax and another one is corporation income tax. Personal income tax levied on incomes of individuals, households, partnerships, and sole-proprietorships Corporation income tax, levied on profits (net earnings) of incorporated firms. tax on the net income of an individual or a business.
The common point of this two types are the income tax rates are generally lower for those who makes less money. Property taxes- it also referred to as millage tax. It is a tax assessed on real estate by the local government. This tax is paid by who owns property such as land, a home or vehicles. Consumptive taxes- a tax only on income that one spends on goods and services. Example, sales tax. Sales taxes are more or less state or local taxes and usually added to the buying cost of certain things.
These taxes will be based on the cost of items and help fund for services provided by state and local government, such as roads, police, and firefighters. Another example are toll road fees, it also are a type of consumption tax. Tax paid by business Corporate taxes-A levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; they are generally applied to companies’ operating earnings, after expenses such as depreciation have been deducted from revenues.
Payroll taxes- There are two major types of payroll tax – one which is deducted from the salaries by the employers. This is known as withholding tax, pay-as-you-go tax, and pay-as-you-earn tax. A second tax refers to the taxes that employers are required to pay for their employees. Therefore, these are directly related to some of the payroll taxes that workers must pay. Other types of taxes Capital gains taxes-Capital Gains taxes are paid on investments that have appreciated. Frequently these investments have been sold. Examples would be stocks, bonds, and real estate.
Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price. Inheritance or Estate Taxes – Of the 7 types of taxes, this is the only type where a tax can happen because of a death. Estate tax is refers to as inheritance tax and are paid by individuals when they inherit any property or money. These taxes are calculated on the basis of aggregate value of the estates’ worth. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.