Question

What is tax? types of tax? advantages and disadvantages of tax?

Answer 1

Governments impose taxes on individuals and businesses to cover operating expenses and finance projects. Taxes can be levied at the local, state and federal levels on income, sales, property and other activities. While some level of taxation is necessary to fund government operations, excessive taxation can have negative consequences. Taxation is a controversial economic and political issue, so people are likely to disagree about the advantages and disadvantages of taxes depending on their personal opinions.

Consumer Spending

Taxation has the potential to decrease consumer spending, because taxes take money away from consumers and reduce disposable income. Lower consumer spending tends to decrease business revenue, which can put negative pressure on hiring and investment. High taxes may inhibit economic growth, and the government sometimes institutes tax cuts during periods of economic hardship to encourage spending and growth. Opponents of taxation may also argue that taxes act as a disincentive to work, since they reduce the direct financial reward of earning income.

Answer 2

Tax

• It is a financial charge or a fee charged by a government for a product or income.

Types of Tax

• Excise Taxes
• Consumption Taxes.
• Property Taxes.
• Estate Taxes.

Excise Taxes

• An excise tax is a tax on specific goods and services. It included in the price.

Consumption Taxes

• Spending on goods and services and indirect, such as a sales tax or a value-added tax. Taxes on goods and services are called consumption tax.

Property Taxes

• Paid for "Real Property" such as land etc. It should be paid annually or semi-annually.

Estate Taxes

• Another form of inheritance tax for the estate.

Advantages:

• Economic bonus  

Disadvantages

• Financial hardship for the middle class

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