Tax Questions
 
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What are the Different Types of Taxes?

Employment taxes

Two main types of employment taxes are collected:

  • FICA Taxes

The FICA taxes has two components: Social Security tax and Medicare Tax.

  • FUTA Taxes

FUTA taxes exist to provide funds states use to provide unemployment benefits.

Other US taxes

There are other types of taxes in the US that are important such as:

  • Federal Customs Duties

The Federal Customs Duties taxes have been known by different names such as tariff on imported goods, excise tax, or customs duties or levies.

  • Misc. State and Local Taxes

Common state and local taxes are:

  • Franchise Tax

Most states impose a franchise tax on corporation for the right to do business in that state.

  • Occupational Taxes

Occupational taxes are taxes on various trades or businesses such as liquor store license, a taxicab permit or a fee to practice certain professions such as law, medicine or accounting.

Proposed taxes in the USA

There are talks and discussions of other types of taxes that may be good in the US such as:

  • The Flat Tax

The Flat Tax would replace the existing taxing system with a single tax rate. This is a very simple taxing system.

  • Value Added Tax (VAT)

The value added tax would replace the federal income tax. A business would pay the VAT on all the materials and services required to manufacture its product. VAT is a tax on consumption. Most civilized countries have the VAT system implemented.

  • National Sales Tax

The proposal of the US National Sales Tax is also called the Fair Tax and would be on all purchases collected at the final sale of goods and services, unlike the VAT. The National Sales Tax would also replace the federal income tax.

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