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TAXES • A tax (from the Latin taxo; "rate") is a financial charge or other levy imposed upon a taxpayer (an individual

or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent. • The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. Governments also obtain resources by creating money (e.g., printing bills and minting coins), through voluntary gifts (e.g., contributions to public universities and museums), by imposing penalties (e.g., traffic fines), by borrowing, and by confiscating wealth. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the Public sector levied on a basis of predetermined criteria and without reference to specific benefit received. In modern taxation systems, taxes are levied in money; but, in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the United Kingdom. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration)[2] may be imposed on the non-paying entity or individual. A fee charged ("levied") by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. Since public goods and services do not allow a nonpayer to be excluded, or allow exclusion by a consumer, there cannot be a market in the good or service, and so they need to be provided by the government or a quasi-government agency, which tend to finance themselves largely through taxes.

An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government activities. In the investing world, this is one of the most important types of taxes and, therefore, one of the most highly debated types of tax is capital gains tax. Capital gains tax represents the tax paid on the increase in value made on an investment.

Direct taxes

crops. local tax (IRAP) is imposed at a rate of generally 3.2%-2. livestock. The individual or organization upon which the tax is levied is responsible for the fulfillment of the tax payment. Unlike consumption taxes (see indirect tax). income tax. typically in an unconditional manner. on the other hand.5%%. Some commentators have argued that "a direct tax is one that cannot be shifted by the taxpayer to someone else. whereas an indirect tax can be. There are reduced rates of tax and tax exemptions available to certain income earners. A direct tax is borne entirely by the entity that pays it. In this sense. such as a poll-tax or head-tax. A direct tax cannot be shifted to another individual or entity. with several exceptions: certain stateowned enterprises are tax-exempt. there is also a regional tax of 1. etc. or wealth of people or companies.8%. such as a seller. People have the freedom to engage in or refrain from such transactions. In addition. indirect taxes such as a sales tax or a value added tax (VAT) are imposed only if and when a taxable transaction occurs. or a property tax which is imposed upon the owner by virtue of ownership. rental profits.9%. can be shifted from one taxpayer to another. In a general sense. where the tax is levied on one entity. personal property tax. the higher the rate of tax payable. The standard rate of Italy corporate tax (IRES) in 2013 is 27. as described below.) as distinct from a tax imposed upon a transaction. the higher the income.1%-0. including real property tax.03% and a municipal tax of 0. • • • • Taxation of an individual's income in Italy is progressive. direct taxes are based on the ability to pay principle but they sometimes work as a disincentive to work harder and earn more because that would mean paying more tax. A taxpayer pays a direct tax to a government for different purposes. bringing the effective tax rate to 31. such a sales tax paid by the buyer in a retail setting. However. which is imposed on the basis of the person's very life or existence. In other words. Direct taxes are different from indirect taxes. and social security contributions. wages. Profit tax . and paid by another. whereas a direct tax (in the general sense) is imposed upon a person. rather than commercial use.e."[1] • A government levy on the income. a direct tax is one imposed upon an individual person (juristic or natural) or property (i. property. and cannot be passed on to another entity.The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed. real and personal property. In 2013 the tax rate for an individual is between 23%-43%.4%. under which taxes paid directly from individuals to the government are not legally classified as direct taxes. Examples include corporation tax. • A tax that is paid directly by an individual or organization to the imposing entity. The tax rate on taxable profits is 16%. income tax or taxes on assets. In addition to direct taxation (IRPEF). there are other definitions as well. Indirect taxes. See also progressive tax. and the tax rate applicable to the revenue of micro-businesses is 2-3%.

• Income tax • An income tax is a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer. Unlike federal or state taxes. A local tax is usually collected in the form of property taxes. Many jurisdictions refer to income tax on business entities as companies tax or corporation tax. • A tax that governments impose on financial income generated by all entities within their jurisdiction. Most jurisdictions exempt locally organized charitable organizations from tax. Income tax is a key source of funds that the government uses to fund its activities and serve the public. rather. Dividends are classified either as ordinary dividends or as qualified dividends. • A is an income tax on dividend payments to the stockholders (shareholders) of a company.Tax profit or taxable profit is used to distinguish between accounting profit or earnings (the number that is generally referred to in financial results for public companies and quoted in the press). The tax rate may increase as taxable income increases (referred to as graduated rates). Credits of various sorts may be allowed that reduce tax. Income tax generally is computed as the product of a tax rate times taxable income. and is used to fund a wide range of civic services from garbage collection to sewer maintenance. The amount of local taxes may vary widely from one jurisdiction to the next. businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. Most countries employ a progressive income tax system in which higher income earners pay a higher tax rate compared to their lower earning counterparts. Tax rates may vary by type or characteristics of the taxpayer. Municipalities have to face a . Capital gains may be taxed at different rates than other income. the benefits arising from local taxes are generally apparent at the community level. Company financial reports often distinguish between profit before tax and after-tax profit. All dividends are ordinary dividends. dividend tax Dividends can be taxed either as ordinary income at ordinary income tax rates or at the preferred long-term capital gains tax rate. the partners are taxed on their share of partnership items. Some dividends are qualified dividends and qualify for the preferred tax rate of 0% or 15%. Taxable profit is the number that is used to calculate tax on income. taxable profit may differ from reported earnings. Details vary widely by jurisdiction. Tax may be imposed by both a country and subdivisions thereof. Local tax • A tax assessed and levied by a local authority such as a county or municipality. and may be higher or lower. For a number of reasons. Partnerships generally are not taxed. By law.

• A tax levied and collected by a state/province and or municipality. but they often are also used to pay coupons and principals on municipal bonds. but the largest example of a local tax is property tax." while low taxation levels may lead to a cutback of essential services. since rising taxes may lead to "taxpayer revolt. .constant balancing act with regards to levying local taxes. Local taxes sometimes come in the form of income or sales taxes. Local taxes are collected in order to fund local government services.