Key Concepts In Tax

It could be argued that what makes the world go round is taxes. Imagine this: a national government that operates on a scale that covers the whole country. 

Building infrastructure, providing national services, giving discounts to the minority, legislating, implementing and enforcing laws, controlling the national economy, and so much more are just some of the few things the national government does. What makes such a government-run? Taxes, of course! 

People who live within a country are taxed in different places: income tax, property tax, and so much more. This is essentially how governments keep their funds and power while they also give back to the people they’re serving.

Because of that, taxes run the world on a macro scale. It’s also important to note that because of this phenomenon as well, we individuals must learn about taxes. Simply paying them off without knowing how they work or what concepts consist within them would be doing yourself a disservice. The world of taxation is very large, especially now that the online world is booming. Things such as online tax filing and finding the best online tax service are all activities that didn’t exist 50 years ago. There is, therefore, a need to educate oneself on the topic.

Property tax

Property tax is essentially what it sounds like: tax imposed by the government on your property. Such properties usually come in the form of homes, buildings, and any private infrastructure that occupies land in a certain location. The government collects property tax in order to gain funding for different government projects such as other infrastructures like bridges, public hospitals, and many more. The tax is manifested by calculating the value of the property itself so that everyone would have a fair price to pay for. The owner of the property is usually the one who pays such taxes, though there may be other systems that let the tenants pay.

Tax deductibles

Tax deduction is a concept that exists within the world of taxes. Basically, tax deductions or deductibles are the different things that make it so that you’d have to pay less tax, as this will be (as the name says) deducted from the whole. The way that tax deductibles come to be is that the government would want the people to act in a certain altruistic way, and they’d reward them using tax deductions. The most common and infamous way of deducting tax is by charitable donations, such as donating a large amount of money to a certain organization. Such money could be written off as a tax deduction, which would lower the tax you’d have to pay as a whole. 

Such a scenario, however, has been viewed as scheming and undermining the altruistic motives of the legislation. This is because some rich people donate to charities that they own themselves. They get tax deductions, but they also still have control of the money since they own the charity.

Tax evasion/fraud

Of course, with such heavily implemented legislation and resource-intensive law, there are some people who try to circumvent paying taxes. There are many ways in which tax evasion and tax fraud are committed. Some examples include not reporting the actual income that they have (since income tax is imposed on your income), making up false tax deductions, or, as the name suggests, avoiding paying taxes altogether. All of these are illegal and highly punishable by law, so you should always be careful with your actions in regard to taxes and try to be on the good side. The punishments imposed on such crimes are high and almost damning, so try to stay out of these activities.