Tax is like a contribution to a state's revenue that is compulsory. It is imposed on the worker's income, transactions, some good costs, and the business's profits. Services are also included.
It is a mandatory contribution to an individual or corporation of a government entity; it can be local, national, or regional. The government uses it for development projects: roads, schools, or any program of security or medicare.
Under tax law, the authorities claim the taxpayers a certain amount on their income from the property. Only the government has the right to impose taxes. Taxes are of three different types:
Regressive tax mostly impacts low-income entities because regardless of being wealthy or middle class, you have to pay the same amount. Property tax is the best example of regressive taxes.
Progressive tax impacts high-income earners because taxpayers' incomes are their liability, and their tax rate increases the tax. Their examples are federal income tax or investment tax, or estate tax.
You can say that regressive and progressive tax affects both high and low-income earners, but proportional taxes do not because both have to pay the same amount.
Why is it so important to understand tax law? Because it gives you basic information about your rights. It is like a sense of stability in society. Law provides liberties, and individual rights protection helps in resolving conflicts.
