Taxes
Taxes
Taxes (pronunciation: /ˈtæksɪz/) are compulsory financial charges or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund various public expenditures. The term 'tax' originates from the Latin word 'taxo', meaning 'I estimate'.
Types of Taxes
There are several types of taxes, including:
- Income Tax: A tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income).
- Sales Tax: A tax paid to a governing body for the sales of certain goods and services.
- Property Tax: A levy on property that the owner is required to pay, with the tax amount based on the value of the property.
- Excise Tax: Taxes paid when purchases are made on a specific good, such as gasoline.
Taxation Principles
The main principles of taxation include:
- Equity: The tax system should be fair, i.e., individuals should pay taxes in line with their ability to pay.
- Certainty: Tax rules should clearly define when the tax is to be paid, how it is to be paid, and how the amount to be paid is to be determined.
- Convenience: The tax system should be designed in a way that facilitates voluntary compliance.
- Economy: The cost of collection should be kept at a minimum for both the government and taxpayers.
Tax Evasion and Avoidance
Tax evasion is an illegal practice where a person, organization or corporation intentionally avoids paying their true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties.
Tax avoidance, on the other hand, is not illegal. It involves taking advantage of the tax system to reduce the amount of tax that is payable by means that are within the law.
See Also
External links
- Medical encyclopedia article on Taxes
- Wikipedia's article - Taxes
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