Although many people hate them, taxes are inevitable. In fact, Benjamin Franklin stated, “Nothing is certain but death and taxes.”As you can’t avoid them, the best thing you can do is understand them. So what are they? What types are there? These questions and more are about to be answered for you here.
Taxes are fees that are charged by the government on certain things which can be categorized as activities, people’s income or products. In general, taxes differ based on the way they are charged. Direct taxes are the ones you or your company will have to pay when charged directly. As for indirect taxes, those will be paid after you buy goods and services.
Those two types of taxes are further broken down into seven types:
- Income Taxes: These are paid by people who earn income by any means.
- Property Taxes: These are rigid taxes which are paid by owners of land, homes or commercial real estate properties. They are collected by the state to help to fund its budget.
- Consumptive Taxes: These are the taxes imposed on the sales of items.
- Corporate Taxes: These taxes are to be levied on a business’ income.
- Payroll Taxes: They are amounts deducted by companies before paying their workers.
- Capital Gains Taxes: These are applied to investments that have appreciated such as bonds and stocks.
- Inheritance or Estate Taxes: They are taxes cut out of a person’s inheritance.
Although many try avoiding them, they are only hurting themselves in the process. Taxes are used in different budgets such as the education budget, health care, national defense, etc. Therefore, whatever you pay now is going to come back to you later. Not to mention, when you pay your taxes late, you also have to pay interest on the amount owed to both the state and federal government. So, help yourself by helping your country and pay your taxes on time.
