Categories of Taxes
- To pay for services, the government needs to raise money through taxesmoney image by cherie from Fotolia.com
The government provides services to society at large. These services include, but are not limited to: defense, law enforcement, education and welfare benefits. To pay for these services federal, state and local governments must levy taxes. These taxes come in many different forms . - Income tax is set as some proportion of your salarykeyboard with -salary- button image by air from Fotolia.com
Many federal governments get most of their money from income tax. This is a tax levied on an individual's annual income. In most countries, income tax is progressive. This means that the more you earn, the greater the proportion of your income you have to pay in income tax. If you are self-employed, you also have to pay tax on your earnings in the same way as if you received a salary. - Sales taxes are often levied on prepared food or other productsmilky products image by Jaroslav Machacek from Fotolia.com
In the U.S, many state and local governments raise tax revenues through sales taxes. These are taxes that are paid on the sale of certain products. They are usually set as a percentage of the cost of a particular item. For example, imagine you live in a jurisdiction that levies a 15 percent sales tax on food. If you wish to buy a meal at a restaurant, and that meal costs $100, then you will also have to pay $15 in sales tax. Sales tax are also sometimes called "consumption taxes." - Corporations pay taxes on their profitsCorporate Building image by Bobby4237 from Fotolia.com
When companies make profits, they are usually expected to pay taxes to the government. Corporate taxes are a percentage of the total profit made by a business in a year. Like income taxes, the proportion profits a business has to pay varies depending on how large its profits are in absolute terms. - You have to pay CGT on the increase in the value of an asset when you come to sell itstock market analysis screenshot image by .shock from Fotolia.com
If you buy stock in a publicly listed company for $100, and the value of that stock subsequently doubles to $200, then you often have to pay capital gains tax (CGT) on this increase in value when you sell the stock. If you live in a jurisdiction with a 10 percent CGT then in the case mentioned, you would have to pay $10 in CGT, because your stock has increased in value by $100 ($200 - $100). Different kinds of assets have different CGT rates in different jurisdictions. - Inheritance tax is paid on assets you inheritHand and document at the meeting image by Dmitry Goygel-Sokol from Fotolia.com
If someone dies and bequeaths to you some of his estate, you, or the estate of the diseased, may have to pay inheritance taxes on it. As with all kinds of taxes, the manner in which it is calculated varies on the jurisdiction, the nature and value of the asset, and whether it is you or the estate of the diseased that is liable to pay the tax.
