The Three Types of Taxes

Principles of Taxation

The benefit principle of taxation is based on two ideas. The first and foremost is that those who benefit from services should be the ones who pay for them. Secondly, people should pay taxes in proportion to the amount of services or benefits they receive. But there are two limitations of this type of taxation. First, many government services provide the greatest benefit to those who can least afford to pay for them (i.e. welfare). The second limitation is that the benefits often are hard to measure.

The second principle of taxation is the ability-to-pay principle, which is based on the idea that people should be taxed according to their ability to pay, regardless of the benefits they receive. This type of tax recognizes that societies are not always able to measure the benefits derived from government spending. It also assumes that people with higher incomes suffer less discomfort paying taxes than people just getting by on their income would.

The three types of taxes are the proportional tax, the progressive tax, and the regressive tax.

A proportional tax imposes the same percentage of taxation on everyone, regardless of income. If the percentage tax rate is constant, the average tax rate is constant, regardless of income. This means that if a person's income goes up, the percentage of total income paid in taxes does not change.

The second tax, theprogressive tax, imposes a higher percentage rate of taxation on people with higher incomes. Progressive taxes use a marginal tax rate that increases as the amount of taxable income increases. Therefore, the percentage of income paid in taxes increases as income goes up.

The final tax is the regressive tax, which imposes a higher percentage rate of taxation on low incomes than on high incomes. For example, if the state sales tax were 5%, the person with the lower income would pay a greater percentage of their total income in sales tax.

Language notes:

We... have come to accept... – ми … (поступово) порозумілися…;

enforcement of law and public order – забезпечення дотримання закону і громадського порядку;

social engineering – соціальна інженерія: наука, що вивчає методи перебудови суспільства;

social welfare – (амер.) соціальне забезпечення, соціальна допомога;

water and waste management system – система управління водними ресурсами і використання відходів;

carbon tax – податок на викиди вуглекислого газу;

direct tax – прямий податок, тобто податок, що стягується державою безпосередньо з доходів чи майна платника податку (прибутковий податок – income tax, податок на прибуток підприємств – corporation income tax, податок зі спадку і дарунку – inheritance/gift tax, податок на майно фізичних осіб – personal wealth/property tax, податок на видобування корисних копалин – severance tax под.);

indirect tax – непрямий податок, тобто податок на товари та послуги, встановлений у вигляді надбавки до ціни або тарифом (акциз – excise tax, податок на додану вартість – value-added tax, мито – customs duty, екологічні податки – environmentally related taxes/charges/fees/duties);

tax loophole – "шпарина" в податковому законодавстві;

if one were asked whether they would trade the tax for the removal of service, they would rather ... – якщо б кого-небудь запитали, що б він вибрав: платити податок або обійтися без якоїсь послуги, він скоріше б...

if the state sales tax were 5%, the person with the lower income would pay… – якби податок на купівлю (продаж) був 5%, людина з більш низьким доходом платила би...