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Posted by on Aug 6, 2016 in Central Bank, Federal Reserve, Tax, Uncategorized |

Types of taxes in a democratic country

Types of taxes in a democratic country

The amount of the taxes in a democratic state is high. Only a few of those taxes apply to regular working people, and therefore many fail to understand the amount of money going to the government through the tax. Taxes can be divided into several groups, income tax, property tax, taxes on goods and services and other taxes.

Income tax is the basic for of taxation, and it affects all individuals and companies with an income. The size of the income tax may be different for different parties. For example, a worker in a company may pay less in tax than the business itself. This happens due to the income power difference. Tax deductions are tax exempts that are given to firms that achieve individual goals.

Personal income tax is, in most cases, paid on a monthly basis, or after every payday depending on the type of salary a person receives. The government does small corrections at the end of every fiscal year. These corrections have two outcomes, additional payment to the administration and the tax refund. The payment to the government is issued to people that underpaid the taxes during the year. A tax refund is given to the people that overpaid it. Another form of the income tax is the social security contribution. Some countries use this to tax the employer into paying a percentage of the employee’s paycheck toward a pension plan for the same employee.

Taxes for goods and services can come in the form of VAT, sales, excises and tariff. VAT is a tax the government applies to all products, from the raw resource up to the final product. Sales tax is a levy that comes in power only when the product reaches its ultimate consumer. Some argue that these taxes discourage retail sales. Whether that is true or not is up to debate. The Only certain thing is that the sales tax affects the poor more than the rich, and in a great scheme of stuff that is not how it should be. Tariff is essential as it charges the movement of goods across the border. Tariff strength can dictate the amount of import and the export.

Property tax is a levy a person or a company has to pay for owning a particular property or the land. One piece of assets can be subjugated to several different property taxes. In general, we have three types of property taxes, land, land improvement, and personal property tax. Property tax is levied for pieces of the land that have no upgrades. The luxury tax is another form of property tax in which the rich people have the obligation to pay the tax percentage of their net worth.

Many other types of taxes exist, including the fees. Prices you see on the sites like  aren’t the costs set by the government, but the state will have some profit from your trading. Once you withdraw a certain amount of money, the state will tax your winning through the fees imposed by the payment option you use.