Understanding of taxes, the types, and why it is necessary to pay taxes

Greetings all and sundry on this great platform, I am here once again to write and submit an entry for my Leofinance Bro adventure quest. I welcome you all to my blog once again guys, I hope you would bear with me as I explore this new topic with you guys. Today, I would be tackling "Tax" as my topic for this article and I hope to do my best to come out with something interesting for reading. Under this topic, I would like us to understand taxes, the types, why it is necessary to pay taxes, and others. without much ado, let's dive into this agenda.

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If you are asked this question, what would have been your response then, okay, taxes are contributions that are imposed on individuals by the government which is mandatory to pay as a citizen. The revenues generated from taxes (tax revenues) are used in financing certain activities of the government including the construction of roads, schools, hospitals, and many other social amenities we can think of. Tax revenues are used in supporting public works and also for the maintenance and construction of governmental infrastructure. In a nutshell, tax revenues are used to create a better economic state for the country so as to provide a better standard of living for the people within the country. Taxes can be charged from the interest or dividends that one earns on an income, payments for goods and services, salary income, and capital gains from certain investments.

In the payment of taxes, involves a certain percentage of the taxpayer's earnings which is collected and given to the government for all these developments. This implies that taxes are paid at certain rates and it is levied by the government of the country which is made mandatory for every working individual. When one intentionally fails to pay his/her tax is called tax evasion and that person is punished for that according to the law of the country. In most countries, they are specific organizational bodies that are employed by the government to collect these taxes. For instance, the Internal Revenue Service (IRS) which is in the United States is responsible for collecting and remitting taxes to the government. Next, we would look at some of the types of taxes we have.

There are several types of taxes and they include, income tax, payroll tax, sales tax, tariff, corporate tax, estate tax, and property tax. I don't know if we can look into the details of each of these types mentioned above.

First of all, Income tax as the name simply explains is a form of tax where a percentage of your income is collected and remitted to the government and used to cater for the development of the country. As mentioned earlier, taxes are collected based on certain marginal tax rates and in the United States, a higher percentage of tax revenues are taken from those of high-income earnings. There are various factors that are taken into consideration when collecting taxes from the taxpayer, and they include their status files such as single, married filing jointly, household head, and or married filing separately. Each of these factors significantly accounts for how much an individual would be taxed. Also, source of income is also considered when collecting taxes.

Secondly, we have payroll taxes and this is involved with an employee and the employer, where the employer removes the tax from the paycheck of the employee and remits that money to the government to be used for the development of the social amenities of the country. Twice of the amount remitted by the employee from the employer is collected from the employer too and remitted to the government. Payroll and income taxes look somehow similar but differ in the case where payroll taxes are used specifically to cater to Medicare and Social Security programs. One may ask what if I am a self-employed person? Yes, as a self-employed person, you pay both the equivalent amount of the employer and employee payroll taxes and it is done via self-employment taxes.

Moreover, sales taxes are the charges that are taken or incurred for making payments for goods or services at the sale point by customers. Over here, the taxes paid by the customers are collected by the business and they remit them to the government for use. Also, tariff is another type of tax that a country collect, and with this one, it involves the tax that is imposed by a country for the imported goods and services from another country. In doing so, the prices of goods and services that are imported from other countries are surged and when that happens, domestic purchases are encouraged. Tariffs can be of two types and they are fixed fee tariffs and ad valorem tariffs. With the formal, the price is a fixed cost based on the item type whilst the latter is based on a percentage of the value of the item.

Furthermore, we have corporate taxes and for that, when a company's income is taxed, we refer to it as corporate tax. It involves a step in calculating that and the link here would help you do that if you feel like checking it out.

Again, estate taxes is another type of tax and with that too, just as the name suggests taxes are only levied on estates that have passed the exclusion limit set by the law of the government. In taking that, the exclusion limit set by law is deducted from the taxable estate. Estate taxes have a marginal rate that is progressive in nature and it is levied from 18% to 40%. The 40% which is known to be the maximum is levied on an estate that super exceeds the exclusion limit set by the government by more than one million dollars.

Lastly, we have property taxes, similar to the name implies these are levied on the properties of an individual and a common example is the real estate ad valorem tax which is paid in the United States. In calculating real estate taxes, the millage rate is used in doing that which indicates the amount per every thousand dollars worth of property's determined value.

I would like to end here and say a very big thank you to all the leaders and MODs of this great community for organizing such a wonderful and splendid challenge for us all to participate. I would also like to use this opportunity to say applause for their hard work in organizing the weekend battle to slay those Lions which was fun and interesting although I was able to slay only two of them and not all. Thank you all for your time and attention for stopping by my post.