Direct tax

The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed. A direct tax is one imposed upon an individual person (juristic or natural) or on property, as distinct from a tax imposed upon a transaction. Indirect taxes such as a sales tax or a value added tax (VAT) are imposed only if and when a taxable transaction occurs; people have the freedom to engage in or refrain from such transactions; whereas a direct tax is imposed upon a person, typically in an unconditional manner, such as a poll-tax or head-tax, which is imposed on the basis of the person's very life or existence, or a property tax which is imposed upon the owner by virtue of ownership, rather than commercial use. 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."

Indirect tax
The term indirect tax has more than one meaning.
In the colloquial sense, an indirect tax (such as sales tax, a specific tax [a tax per unit], value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed. 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."[1] An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products.[2] Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of a higher price. Thus, an indirect tax is such which can be shifted or passed on. The degree to which the burden of a tax is shifted determines whether a tax is primarily direct or primarily indirect. This is a function of the relative elasticity of the supply and demand of the goods or services being taxed. Under this definition, even income taxes may be indirect. The term indirect tax has a different meaning for U.S. constitutional law purposes: see direct tax and excise tax in the United States.

Regressive tax

a year. where the tax rate is fixed as the amount subject to taxation increases. It can also apply to adjustment of the tax base by using tax exemptions. referring to the way the rate progresses from low to high. tax credits. where the average tax rate increases as the amount subject to taxation increases. if the activity being taxed is more likely to be carried out by the poor and less likely to be carried out by the rich. or income. consumption.A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. multi-year. For example. referring to the way the rate progresses from high to low. or selective taxation that creates progressive distribution effects. where people with more income pay a higher percentage of that income in tax than do those with less income.[8][9][10] Progressive taxation often must be considered as part of an overall system since tax codes have many interdependent variables. The regressivity of a particular tax often depends on the propensity of the tax payers to engage in the taxed activity relative to their income.[1][2][3][4][5] "Regressive" describes a distribution effect on income or expenditure. then the tax may be considered regressive. the United States has the .[8][9][10][11] In between is a flat or proportional tax. For example. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay. as they shift the incidence increasingly to those with a higher ability-to-pay. the income-elasticity of the good being taxed as well as the income-substitution effect must be considered. Regressive taxes tend to reduce the tax incidence of people with higher abilityto-pay. It can be applied to individual taxes or to a tax system as a whole. where the average tax rate exceeds the marginal tax rate. a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer's ability to pay as measured by assets. Progressive tax A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. where the average tax rate is less than the marginal tax rate.[1][2][3][4][5] "Progressive" describes a distribution effect on income or expenditure. or lifetime. To determine whether a tax is regressive. where every person has to pay the same amount of money. a year. The term is frequently applied in reference to personal income taxes. or lifetime. In other words.[6][7] In terms of individual income and wealth. The term is frequently applied in reference to fixed taxes. as they shift the incidence disproportionately to those with lower ability-to-pay. when refundable tax credits and other tax incentives are included across the entire income spectrum. The opposite of a regressive tax is a progressive tax. multi-year.[6][7] It can be applied to individual taxes or to a tax system as a whole. a sales tax on luxury goods or the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption or decreases a tax burden on low end consumption respectively.

[11] The opposite of a progressive tax is a regressive tax. although its overall income tax rates are below the OECD average.most progressive income tax code among its peer nations. where the relative tax rate or burden increases as an individual's ability to pay it decreases.[12][13] In between is a proportional tax. where the tax rate is fixed as the amount subject to taxation increases. Sales taxes are often criticized because low income households must pay a greater share of their disposable income to a sales tax than wealthier households.[5] .

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