12 Different Ways Americans are Taxed
Let me start by quoting a massively overused phrase: “in this world nothing is certain
but death and taxes.” While we are all accustomed to giving some of our hard-earned
money to the government, you might be surprised at how many different ways we pay
to the numerous levels of our government.
1) Income Taxes
The United States income tax is usually the first thing people think of when they
hear the word tax. That is because between Federal and State taxes some Americans
loose as much as 35% of their paychecks to income taxes.
2) Business Taxes
Also known as corporate taxes, these are direct taxes levied on the profits of businesses.
Expenses that are deemed necessary to the business can usually be deducted to lower
the amount of profits subject to taxation.
3) Payroll Taxes
These are the taxes that must be deducted from wages paid to employees, and the
employer usually must match the amounts. Some
payroll taxes include federal withholdings, disability insurance, Medicare,
and other state withholdings.
4) Capital Gains Taxes
In the United States a tax is levied on all income generated from a taxpayer’s
capital gains, which are profits from the sale of an asset that was purchased
at a lower price. Alternatively, if a taxpayer suffers from capital losses they
can deduct the full loss amounts. The most common capital gains are created from
the sale of stocks, bonds, and property.
5) Inheritance Taxes
The inheritance tax – a/k/a the “death tax” – is a tax that arises from the death
of a taxpayer. It is imposed on the transfer of any property or asset transferred
as the result of a death. However, when they are left to a spouse or a charity,
the tax usually does not apply.
6) Sales Taxes
Consumption taxes – a/k/a sales tax – are levied at the point of purchase for specific
goods and services. It is usually a percentage determine by the levels of government
charging the tax. Due to individual state and local taxes, the exact rate you pay
will vary widely by location.
7) Property Taxes
Property taxes are imposed on property by reason of its ownership. Typically, these
taxes are paid on real estate. However, property taxes can also be paid on personal
property, such as boats, automobiles, recreational vehicles, and other business
inventories.
8) Excise Taxes
Any tax that is based on the value of the product being taxed is considered an excise
tax. They are based on the quantity of the product. Common examples include those
levied on gasoline, cigarettes, taxes, and even those on CD-R's and DVD-R's that
are paid to copyright owners.
9) Gift Taxes
A gift tax is a one that is levied on the transfer of property by one taxpayer to
another while receiving either nothing or something with a less than equal value
in return. Selling something at less than it’s full value or making an interest-free
or reduced interest loan, may qualify as making a gift. The IRS’s general rule is
that any gift is a taxable gift. However, there are many exceptions.
10) Retirement Taxes
All taxes levied by the government to plan for a taxpayer’s retirement could be
considered retirement taxes. In the United States we pay into a social security
system that provides income to retired workers from the general fund. Our tax is
regressive as we all pay the same rate up to a specific cap. Then all income above
the cap is not taxes.
11) Tariffs
An import or export tariff is one that is paid by the movers of any good through
a political border. Typically, it is used to “encourage” local businesses and “discourage”
the purchase of foreign goods, by increasing the price for the foreign goods. Consider
this when you are looking at buying a car as tariffs can increase the cost of a
vehicle manufactured outside the U.S.
12) Tolls
Tolls are fees charged to drivers who cross through designated bridges, tunnels,
and even some roads. They are almost always paid in fixed amounts each time you
drive pass through the restricted area. Tolls are typically used fund state projects
but can also be used for privately funded projects.