Taxes claim a major chunk in financing because they are one of the biggest sources from which the government amasses money for often undue purposes. But if one were to confer on this subject, it would take a lifetime to do so. So, it’d be wise to give the subject a wide berth & get into understanding what taxes mainly are, and how many kinds there are that affect us. Below is an enumeration of the types of taxes that are implemented on the denizens of a country:
- Consumption Tax: This, like the name would suggest, is levied on us when we spend money & not when we earn it. An example of this would be Sales Tax, something which the state excises to generate revenue. A better example would be of certain goods like alcohol, gasoline, etc.
- Progressive Tax: A progressive tax has different values of taxes imposed on different classes of the society. Aristocrats have a higher tax levied on them than the bourgeois of the community. This is the reason why the more wealthy Americans are imposed a higher rate of tax than middle-class Americans.
- Regressive Tax: An antonym for progressive, regressive tax is one which is either stagnant or that which does not accelerate. This could infer either that the wealthy pay less or that everyone is imposed a flat rate of tax. However, the inequality that might become apparent here is that the poor would be more affected than the rich because of the same percentage of tax. An 18% of tax wouldn’t put a dent in a millionaire’s vault but the same would plague the poor.
- Property Tax: Pretty self-explanatory, these are the taxes you would pay for the homes, land or commercial spaces you own. While deciding to build a house, this is one of the most important factors that should be taken into consideration because this’d impact significantly on your budget. One disheartening thing, amongst many others, is that this cannot be amortized. You’d have to continue paying these as long as you plan on using that particular space.
- Capital Gains Tax: Capital Gains taxes are realised when you make a hefty bag of money after you sell an investment. This isn’t too common amongst the commoners because not many find investments worth their time or money.
- Income Tax: This might ring a bell to you as this is one of the most common taxes that are at play. Federal income taxes come under both progressive & marginal. The term Marginal is used whenever taxes are imposed based on different income brackets. The tax plans for this year have been renewed.
The above types are just a summary of taxes for the common man to understand. To comprehend the subject fully, it has to be delved in and apprehended.