gov and taxes Flashcards
What is a direct tax?
A tax directly on an individual’s or organization’s income or wealth, not passed to others.
Examples of direct taxes?
Income tax, property tax, capital gains tax.
What is an indirect tax?
A tax where the tax burden can shift to the consumer.
Examples of indirect taxes?
GST, excise duty, customs duty.
Why are indirect taxes sometimes called “hidden taxes”?
Because the tax amount isn’t obvious to consumers when purchasing products.
What is an excise tax?
A tax on products causing negative externalities, like tobacco, alcohol, and fuel.
What are taxes on income typically considered?
Direct taxes, such as income tax and corporate tax.
What is a progressive tax?
A tax system where the rate increases with higher income.
Example of a progressive tax in Australia
Personal income tax, where tax rate rises with income.
What is a regressive tax?
A tax where lower-income individuals pay a higher percentage of their income.
Example of a regressive tax in Australia?
GST, as lower-income earners spend more of their income on taxed goods.
What is a proportional tax?
A tax rate that remains constant across all income levels.
Example of a proportional tax in Australia?
Corporate tax rate of 30% for companies over a certain income.
