The Basics of Income Tax By Rick Goldfeller At Isnare.com Ezine Articles

Paying taxes is one of the hardest things for us to do – I can't imagine anybody that'd actually hand out the government's “share” of our income willingly. That's what income tax basically is, the governing body “charges” you for the income you earn. This is a mandatory “system” implemented by the democratic type of government; why do we pay this? For those born yesterday, they need the cash to help finance their operations, so they can continue running the show. As for those being governed by this type, it goes without saying that we play our part, by contributing our share of financial help – guess that's why good ol' Abe Lincoln said “a government of the people, by the people, and for the people”.

Moving forward, the percentage of income tax we pay depends on the type of income we get, and basically on what the governing body in your area charges. There are some instances where there'll be no tax at all, emphasis on the instances, because it's definitely not that common. Anyways, going deeper into the subject matter, it comes in two types, the first one being: progressive tax. How does this method or system work? Simple – the amount deducted from your income varies. The more you earn, the more you pay, and continues to increase as the your “flow of cash” gets bigger.

It does have a systematic computation table to follow, but nevertheless, deductions do get bigger as you earn more. The 2nd type is known as flat tax, which generally treats all the types of income as one. Here exists something known as an income tax system, which maintains balance in a sort of “yin yang” way. If the system recognizes losses sustained by one type of income, it maintains the balance by putting more deductions on another type. Many people feel that they're getting cheated out of their money, in the sense that the government isn't utilizing ever single dollar collected as income tax for improvement.

Well that's true in some parts of the world with governing officials reeking of corruption – but let's not dwell any further on that topic; I've no intentions of starting a riot. Who came up with the bright idea that us citizens should pay “tribute” to the “leaders” of our countries? The story dates back to the Civil War in the United States. The war between states couldn't take place without the right weapons and equipment – thousands of men throwing fists and shouting at each other for years won't change much. So what happened was the government at that time asked their people to “pitch in” whatever they could to help finance the necessities for combat.

Apparently they only did so when needed, therefore there wasn't really a formal “financial system” of collection implemented. But as time passed, the guys in charge realized how convenient, rather useful the people's money was – that's when the idea of paying annual taxes slowly came into the picture. The details of what exactly happened are a little too long to post here, that's why I've just gave you a short explanation of it. But if you'd really wanna explore the boring topic further, out of interest or for the sake of passing a school report, you could always serach the net for more info.

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