Types Of Taxes

Taxes may be classified into three types: (1) property taxes, (2) excise taxes, and (3) income taxes. These taxes may be levied by the Federal government, state governments, or local governments.

Property Taxes

Local governments usually have jurisdiction over property taxes, which are commonly charged on a county basis. In addition to these, individual cities and towns may have special property taxes for industrial concerns located within the city limits.

Property taxes vary widely from one locality to another, but the average annual amount of these charges is 1 to 4 percent of the assessed valuation. Taxes of this type are referred to as direct since they must be paid directly by the particular concern and cannot be passed on as such to the consumer.

Excise Taxes

Excise tares are levied by Federal and state governments. Federal excise taxes include charges for import customs duties, transfer of stocks and bonds, and a large number of other similar items. Manufacturers' and retailers' excise taxes are levied by Federal and state governments on the sale of many products such as gasoline and alcoholic beverages. Taxes of this type are often referred to as indirect since they can be passed on to the consumer. Many business concerns must also pay excise taxes for the privilege of carrying on a business or manufacturing enterprise in their particular localities.

Income Taxes

In general, income taxes are based on gross earnings, which are defined as the difference between total income and total product cost. Revenue from income taxes is an important source of capital for both Federal and state governments. National and state laws are the basis for these levies, and the laws change from year to year. State income taxes vary from one state to another and are a function of the gross earnings for individual concerns. Depending on the particular state and the existing laws, state income taxes may range from 0 to 5 percent or more of gross earnings.

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