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Tax Basics: Personal & Business

38 cards · 🇺🇸 English

Types of taxes and core tax concepts for individuals and businesses.

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Tax

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  1. 1Tax
    A mandatory financial charge or levy imposed by a governmental organization to support government spending and public expenditures or to regulate economic activity
  2. 2direct vs indirect taxes (economic definition)
    Direct taxes may be adjusted to individual taxpayer characteristics (e.g., income tax), whereas indirect taxes are levied on transactions irrespective of buyer or seller circumstances (e.g., sales tax)
  3. 3Progressive tax
    A tax imposed so that the effective tax rate increases as the amount to which the rate is applied increases
  4. 4Regressive tax
    A tax where the effective tax rate decreases as the amount to which the rate is applied increases
  5. 5Proportional tax
    A tax where the effective tax rate is fixed, while the amount to which the rate is applied increases (also called a flat tax)
  6. 6Corporate tax
    Income tax, capital tax, net-worth tax, or other taxes imposed on corporations, often at different rates and bases than for individuals
  7. 7Value-Added Tax (VAT)
    A tax that applies the equivalent of a sales tax to every operation that creates value, with businesses paying tax on their 'value-added' and recovering previously paid VAT
  8. 8VAT vs sales tax
    VAT is collected at each stage of production/distribution with businesses remitting only the value-added portion, while sales tax is collected once at final consumer sale
  9. 9Excise tax
    An indirect tax imposed on goods during manufacture, production, or distribution, usually proportionate to quantity or value (e.g., alcohol, tobacco)
  10. 10Property tax
    An ad valorem tax levy on the value of property (land, improvements, or personal property) that the owner is required to pay to a government
  11. 11Wealth tax
    A tax levied on the total value of personal assets including bank deposits, real estate, insurance, pension plans, business ownership, and securities, typically with liabilities deducted
  12. 12Inheritance tax (estate tax)
    Taxes that arise for inheritance or inherited income; in the US, estate tax is on the deceased's estate while inheritance tax is on beneficiaries
  13. 13Capital gains tax
    Tax on gains from the sale of capital assets (those not held for sale in ordinary business), often at preferential rates compared to ordinary income
  14. 14Payroll tax
    Taxes related to employment, often funding retirement or healthcare systems, computed by reference to wages or self-employment earnings
  15. 15Ad valorem tax
    A tax where the tax base is the value of a good, service, or property (e.g., sales tax, property tax, inheritance tax)
  16. 16Per unit tax
    A tax where the tax base is the quantity of something, regardless of its price (e.g., excise tax on cigarettes per pack)
  17. 17Tariff (customs duty)
    A charge for the movement of goods through a political border, used to discourage trade or protect domestic industries
  18. 18Poll tax (capitation tax)
    A tax that levies a set amount per individual, regardless of income or wealth; an example of a fixed tax
  19. 19Sin tax
    High excise taxes on products like alcohol, tobacco, or marijuana, used to discourage consumption through social engineering
  20. 20Carbon tax
    A tax on the consumption of carbon-based non-renewable fuels (petrol, diesel, jet fuel, natural gas) to reduce carbon release into the atmosphere
  21. 21Tax compliance
    Policy actions and individual behavior aimed at ensuring taxpayers pay the right amount of tax at the right time and secure correct allowances and relief
  22. 22Pay-as-you-earn (PAYE) system
    A tax collection system where personal income tax is collected throughout the tax year, with corrections (refunds or payments) made after year-end
  23. 23Negative income tax (NIT)
    A progressive income tax system where people earning below a certain amount receive supplemental payment from the government instead of paying taxes
  24. 24Fiscal capacity
    A government's ability to raise taxes to fund its operations and services
  25. 25Tax haven
    Countries (usually small) that impose minimal taxes on personal and corporate income to attract capital from abroad, resulting in tax revenue loss for other countries
  26. 26Stamp duty
    A tax levied on legal documents, historically requiring a physical stamp; now charged on transactions involving securities, land, or property transfers
  27. 27Land-value tax (LVT)
    A tax levied only on the unimproved value of land, not buildings or improvements; proponents argue it doesn't distort market mechanisms or create deadweight losses
  28. 28Expatriation tax
    A tax on individuals who renounce their citizenship or residence, often based on deemed disposition of all property
  29. 29Remittance tax
    An excise tax levied on international money transfers, typically paid by senders to recipients in foreign countries
  30. 30Seigniorage
    A critical historical form of taxation: the tax on the creation of money

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