Tax is a fee that is imposed by the government on any income or a product. Taxes are usually imposed on citizens of the country for a larger cause. The Internal Revenue Service or the IRS has the right to collect taxes on behalf of the Federal government. When tax is imposed on personal income or corporate income, it is usually referred to as a direct tax. On the other hand, when taxes are imposed on services offered or cost of an article, they are referred to as indirect taxes.

Taxes are levied on citizens to obtain fund for the betterment of-

• Public works
• Economic infrastructures
• Health care
• Education
• Waste management
• Water management
• Energy management
• Public transport

There are different types of taxes that are levied on citizens of the country. They are as follows-

• Corporation tax: Corporation taxes are usually imposed on corporate earnings. The company’s capital gains are also taxed.
• Income tax: The amount of tax you are paying depends on your income. In majority of the countries, income tax is deducted directly from the income an individual provided you fall in the taxable slab.
• Capital Gains tax: This tax is usually imposed on the profits earned when you sell an asset.
• Retirement tax: Retirement tax is imposed so that the proceeds can fund the social security system. This in turn provides income for the retired individuals.
• Poll tax: Poll tax is also known as capitation tax or per capita tax. It is usually collected as a fixed amount from every individual.
• Personal property tax:

Personal property tax is usually collected from individuals who own property in a particular area. It is collected periodically. E.g. boat, or for renting our a piece of artwork or a vehicle.

• Property tax: Property tax includes inheritance tax, stamp duty etc. It is usually applicable to property that is owned, e.g. real estate.
• Value added tax: Value added taxes were collected when excise as well as sales taxes was not collected.
• Wealth tax: Wealth tax is collected depending on an individual’s net worth. It is usually calculated after subtracting liabilities from assets.
• Tariff: Tariff is usually collected during export or import of goods crossing a political boundary.
• Excise: An example of excise tax is sales tax. Excise is imposed depending on the product quantity that is being purchased. It is independent of the product value that is being taxed.

Taxes are usually paid by individuals as well as business organizations. As a taxpayer you have certain rights of your own. The different types of taxes have been categorized by the OECD or Organization for Economic Co-Operation and Development. There are ranges of numbers which are used to denote particular type of taxes. The numbers range between 1000 and 6200.