What Are the Different Types of Government Taxes?

Most societies require their citizens to pay taxes.

Supreme Court Justice Oliver Wendell Holmes, Jr. once said, "Taxes are what we pay for civilized society." They are defined as any of a large number of involuntary fees levied by the government upon individuals and businesses. According to the Tax Policy Center, just about everyone pays them in one way or another. There are many different taxes that cover many different forms of economic activities.

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Personal Income Tax

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Income tax is assessed against the amount of money you earn over a period of time and it is typically collected once a year. According to the U.S. Treasury Department, personal income taxes originated in Wisconsin in 1911. The Federal income tax was started in 1913 by the 16th Amendment to the Constitution. The rate of income tax paid can vary according to the size of your income.

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Corporate Income Taxes

This is a levy imposed by most states upon the income of corporations. Some states assess a flat corporate tax rate while others use variable (progressive) rates.

Sales Taxes

Sales taxes are a form of fixed-rate levies on the sales of goods or services. It is the tax that is the most visible, since you typically pay it every time you buy merchandise at the store.

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Luxury Tax

According to the IRS, this is an additional tax assessed on what the Government considers "luxury" items. This usually means highly expensive goods like yachts and jewelry are subject to not only a sales tax but also an additional luxury tax.

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Use Tax

This tax is assessed on services such as the storage of goods, or on leasing items; examples include car rentals. Use tax is also used in the United States to tax goods that are bought out-of-state and shipped to another state.

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Property Taxes

These taxes are assessed on real estate or vehicles. This includes cars, often called an auto registration fee, homes, factories, airplanes and commercial properties, such as malls.

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Tariffs

Tariffs are taxes assessed on goods entering or leaving a country. Primarily they are used to raise the prices of goods entering the country and are aimed to protect an industry from foreign competition.

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Sin Tax

This is a tax on the purchase of items or services that are considered to be undesirable by society. This includes alcohol and cigarettes. Other taxes covered under this category include taxes on prostitution, gambling or heavy-polluting vehicles.

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Capital Gains Tax

Capital gains taxes are assessed on goods sold for more than was paid to purchase them. This includes the sale of homes, stocks and securities for a higher price than they were purchased for.

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Payroll Tax

This tax covers a broad number of taxes. Payroll tax includes withholding taxes paid when you work and is used to cover your income taxes. It also includes taxes to support unemployment insurance, Social Security, Medicare and self-employment taxes.

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Fuel Taxes

Fuel Taxes are designed to pay for roads and other related services. This is assessed on the sale of gasoline.

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