The term tax comes from a Latin word taxo, which means I estimate. It implies a financial levy or charge imposed on a tax payer, which can be a business organization or an individual. With regards to rates of taxation there are two major types of tax are flat tax and variable tax.
Flat tax can be defined as a tax structure with a uniform marginal rate. Normally, this term is applicable in scenarios where a corporate house or individual is being charged a single marginal rate. In case of variable tax the rates keep changing over the time.
Tax is collected in terms of money or cash. In various countries, the rules and regulations regarding taxation are different and sometimes the nomenclature of the type of tax is different.
Different types of tax can be enumerated as below –
The income tax is normally levied on the earnings of business entities as well as individuals. Corporations are also liable to pay income tax. Normally authorities levy tax on net gains, net profits and other forms of income.
The state and local income tax are imposed primarily in the US and operate along with the federal income tax. These tax are used as reductions for calculating the Federal income tax.
There are two major types of payroll tax one which is deducted from the salaries by the employers. This is known as withholding tax, pay-as-you-go tax, and pay-as-you-earn tax.
A second tax is levied on the funds owned by the employers and is taken for employing the workers.
In most of the countries the capital gains tax is regarded as part of the income tax. Normally this tax is levied on capital assets sale. The capital assets are ones that cannot be sold through conventional procedures.
Sales tax is charged when a product or service is marketed to a final customer. Retail companies have often stated that these taxes hamper their activities. Flat rate sales tax is regarded as regressive because lower income people are affected more.
Estate tax is also referred to as inheritance tax and are paid by individuals when they inherit any property or money. These taxes are calculated on the basis of aggregate value of the estates worth.
Excise tax is imposed on the quantity of goods or products bought, as opposed to their total worth. This makes this tax different from others where the value of the products or goods forms the basis of tax.
Corporate tax or company tax is imposed in certain countries on certain types of legal business entities. This tax are also applicable at state levels or other lower levels of administration.
In economic parlance, gift tax is the tax charged on the property or money gifted by one person to another. This tax is different from the inheritance tax, which is imposed on property or money inherited after a persons death.
The transfer tax is collected on money or property that changes hands from one owner to another. From a legal point of view, it can be defined as a transfer fee that is collected on the changing of property titles.
Property tax is also referred to as millage tax. In economic terms it is defined as an ad valorem levy which has to be paid by the owner of a property. This tax is charged by governing authorities of the particular area where the property is located.
Consumption tax is imposed on expenditure for various products and services. Usually the money spent on buying or using these goods and services, serves as the basis of these tax.
Toll tax is taken for using a road that has been constructed publicly or privately. Roads which do not take toll tax use other ways of financing their expenses like general tax funds or fuel tax.
Last Updated on : 23rd June 2015