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Tax came from the Latin word "taxo", this is a charge that is imposed by the state to the taxpayer, so they can fund different public expenditures. A person is punishable by the law if they fail to pay their taxes. There are direct taxes and indirect taxes. Taxes are paid by the equivalent of its labor or by money. There are still some countries that does not impose taxes or has a low rate with their taxes. There are different area of taxation. The taxes are collected by a government sector such as the Internal Revenue Service (IRS).

 

Here are the different types of taxes:

 

A.            Income tax

 

There are a lot of jurisdictions that OTA tax the income of businesses, individuals and corporations. The tax is imposed on the net profit of the businesses, the net gain and from other income. The rate of this tax depends on the level of income of the individual.

 

B.            Personal income tax

 

This type of tax is usually collected when you earn. It is like a pay as you earn basis. They make corrections at the end of every tax year. The collections are made, so they could check taxpayers who did not pay enough and for taxpayers who overpaid. Taxpayers who overpaid will receive a  refund from the government. the is often collected on a pay-as-you-earn basis, with small corrections made soon after the end of the tax year.

 

C.            Negative income

 

This type of tax is for people who are earning below the certain number. Instead of them paying taxes to the government, they will receive a certain amount of money from the government.

 

D.            Capital gains tax

 

Capital gain is the gain of the assets or of the sale. In some jurisdictions, personal assets is included capital assets. There are some jurisdictions that provide preferential tax rates for capital gains. Click here for more info about tax.

 

E.            Corporate tax

 

Corporate tax refers to the capital, income and net worth of corporations. The tax rate for corporations may differ from the taxable individuals.

 

F.            Social security contributions

 

These contributions are made by employees. This is a compulsory payment and it is computed from the earnings or wages of the individual. The tax rate of employers and employees are different.

 

G.           Payroll tax

 

This type of tax is based on the total payroll of individuals.

 

H.            Property tax

 

This type of tax is imposed to immovable properties and to some types of movable properties.