Kinds of taxes

 

Vocabulary

levy	kind (2)	government
tax	most	many/much
include	the most	important
property	income	transaction
value	such	factory
equipment	direct	indirect
expect	pay	because
ancient	rank	important
chief	source	wage
salary	income	local
rent	dividend	interest (2)
earn	nation	world
main	type	individual
also	personal	corporate
deduct	automatic	apply/applied (2)
employer	employee	unemployed
describe	tax office	corporation
shift	cost	customer
raise	estate	trust (2)
general	consider	in general/generally
gain	capital (2)	capital gains
price	profit	separate
sale	receive	exchange
property	share	shares
asset	loss	make/made
sale	add	subtract
overall	amount	work out (2)
liable	treat	country (2)
ordinary	charge	other
include	estate	inheritance
gift	heir	give/gave/given
during	away	give away
donor	lifetime	recipient

 
 
Governments levy many kinds of taxes. The most important kinds include property taxes, income taxes, and taxes on transactions.

Property Taxes

Property taxes are levied on the value of such property as houses, shops, factories, farms, and business equipment. They are called direct taxes because they are levied directly on the people who are expected to pay them.

The property tax first became important in ancient times. Today, it ranks as the chief source of income for many local governments.

Income Taxes

Income taxes are levied on income from such sources as wages and salaries, dividends, interest, rent, and earnings of companies. Most nations in the world levy income taxes.

There are two main types of income taxes–individual income taxes and corporate income taxes.

Individual Income Taxes

Individual income taxes, also called personal income taxes, are applied to the income of individuals and families. Many people have income tax deducted automatically from their earnings by employers, who then pay it to the tax office.

Corporate Income Taxes

Corporate income taxes are levied on earnings of companies or corporations. The corporate income tax also may be described as a shifted tax. This is because companies shift the cost of the tax to their customers by raising prices.

Earnings of Estates and Trusts

Income taxes may also be levied on the earnings of estates and trusts. They generally are considered to be direct taxes.

Capital Gains Tax

Capital gains tax is a tax, separate from income tax, levied on profits received from the sale or exchange of property, shares, or other assets.

If losses are made on some sales, they can be subtracted from overall profits to work out the amount liable to capital gains tax.

Some countries treat capital gains as ordinary income, and charge income tax on them.

Other Taxes

Other taxes include estate taxes, inheritance taxes, and gift taxes.

An estate tax is applied to the value of property before it has been given to heirs. An inheritance tax is levied on the value of property after it has been given to heirs.

A gift tax is applied to the value of property that is given away during a donor’s lifetime. The donor pays the tax. Inheritance tax is levied in the United Kingdom and Ireland.
 

 
 
  Questions

1. What are the three most important kinds of taxes? The three most important kinds of taxes are….

2. What are some examples of property taxes? Examples of property taxes include….

3. Are property taxes a recent development?

4. All countries of the world levy income taxes. True or false? If false, which ones do not?

5. Do individual employees usually handle their income taxes? Why don’t they handle their income taxes?

6. What does shifted tax mean? Shifted tax means….

7. What are estates and trusts? How do they make money?

8. What are capital gains taxes? Do you always pay capital gains tax?

9. Describe estate taxes, inheritance taxes, and gift taxes.
 
 
A. Are there many different types of taxes in your country? What are some types of taxes in your country?

B. Do you think these taxes are fair? What do people think of these taxes?

C. Should the tax laws or system be changed?
 
 

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