Economics Project

Taxes
Abdelrahman Shalabi - Asser Shamsi -
Yousef Samer
Taxes What is Tax?
A tax is a compulsory financial charge or some
other type of levy imposed on a taxpayer (an
individual or legal entity) by a governmental
organization in order to fund government
spending and various public expenditures
(regional, local, or national),[2] and tax compliance
refers to policy actions and individual behaviour
aimed at ensuring that taxpayers are paying the
right amount of tax at the right time and securing
the correct tax allowances and tax reliefs.[3] The
first known taxation took place in Ancient Egypt
around 3000–2800 BC.[4] A failure to pay in a timely
manner (non-compliance), along with evasion of
or resistance to taxation, is punishable by law.
Taxes consist of direct or indirect taxes and may
be paid in money or as its labor equivalent.
Taxes
Definition of the key words:
The main ones are:

Consumption Tax
A consumption tax is a tax on the money people spend, not the money people earn.
Sales taxes, which state and local governments use to raise revenue, are a type of
consumption tax. An excise tax on a specific good, such as alcohol or gasoline, is
another example of a consumption tax. Some economists and presidential
candidates have proposed a federal consumption tax for the U.S. that could offset or
replace taxes on capital gains and dividends.
Taxes

Progressive Tax

This is a tax that is higher for taxpayers with more money. In a progressive tax system like the
U.S. federal income tax, wealthy individuals pay tax at a higher rate than less wealthy individuals.
This is why wealthy Americans are taxed more than middle-class Americans and middle-class
Americans are taxed at a higher rate than working-class Americans.

Regressive Tax

A regressive tax is one that is not progressive. This could either mean that the tax is lower for wealthy
individuals or that the tax is flat (everyone pays the same rate). Why is a flat tax regressive? People with
lower incomes would feel the effect of a flat tax more strongly than people with higher incomes. To a
multi-millionaire, a 15% tax wouldn’t translate to a substantial decrease in quality of life. To someone
making $30,000 a year, a 15% tax would mean a serious dent in spending power.
Taxes
The Rest are:
VAT or Ad Valorem Tax

Property Tax

Capital Gains Taxes

Inheritance/Estate Taxes

Payroll Taxes

Income Taxes
Taxes
Is it a Micro or Macro topic?

Tax is Microeconomics

What is Microeconomics?

Microeconomics is the study of individual and business decisions regarding the allocation of
resources and prices of goods and services. The term also considered taxes, regulations, and
government legislation.
Taxes Why is it important in Microeconomics or
Macroeconomics?

The macroeconomic effects of taxes are

important because they can affect people's
well-being, although those effects do not
always directly correspond to the effects on
measured economic output. Macroeconomic
changes also influence the amount of revenue
a tax system raises, through so-called dynamic
effects.
Taxes Its role in understanding the economy of
a certain country.

Collecting taxes and fees is a fundamental way for

countries to generate public revenues that make
it possible to finance investments in human
capital, infrastructure, and the provision of
services for citizens and businesses.
Taxes

Its effect on supply and demand

The effect of the tax on the supply-demand equilibrium is to shift the quantity toward a point where
the before-tax demand minus the before-tax supply is the amount of the tax. A tax increases the
price a buyer pays by less than the tax. Similarly, the price the seller obtains falls, but by less than the
tax.
Taxes Examples from Saudi Arabia with respect to
Taxes..

There is no individual income tax scheme in

Saudi Arabia. Income tax is not imposed on
an individual's earnings if they are derived only
from employment in Saudi Arabia.
Non-employment income is taxed as an entity
or permanent establishment (PE).Jum. II 6, 1444
AH
Thank You For Your
Time…