The contributions made from taxes are helpful in funding many government projects and paying workers. For instance, they are used in building bridges and roads to the health care and education system. Every responsible citizen is expected to pay taxes.
The concept of income tax was introduced in 10 AD by Emperor Wang Mang. Initially many people considered it as a form of stealing. People could be charged a lot of money because they did not have records of showing their true earnings. The emperor was overthrown after thirteen years for introducing this system. People preferred the former system where they used to pay per person and property taxes.
In the modern days, income tax is based on the individual’s earnings. You pay tax for the money earned. This article is going to discuss the different types of income taxes paid by people.
At this level, taxes are very complicated. Corporate taxes are paid by companies after paying all their expenses. That is the loose interpretation of this form of income tax.
This is that tax that is applied directly to the individual’s earnings. It is computed from the taxable income. As a taxpayer, you will only pay tax on what you earn. Individuals who have paid a lot of money are given some money as a refund at the end of the year. Those who have paid little money are expected to make remittance for making up the difference.
Both the employees and employees are supposed to pay taxes based on what they earn. The amount paid by the employees is considered as the basic taxable income. In some countries, the employer is expected to remit the all the taxes collected from the employees. This money is paid to the government.
Capital gain tax
This has been among the debatable subjects for many years. Many people have difficulties in figuring it out. Ideally, this is the money paid when a property or an item is sold at a high amount that it was originally paid for. The main problem that is experienced when determining the value of such items is keeping with deflation of inflation. These are the two factors that determine what is gained during a transaction.
Understanding the different types of taxes will help you in knowing why the taxpayers express their frustrations when they are taxed in different sectors. It will also help you in avoiding over taxation.