There are three primary types of taxes, including income tax, property tax, and sales taxes. Income taxes are paid on personal and business revenue and interest income (Fay, 2021). Sales taxes are consumption taxes charged by the government when a person purchases any products or services (Fay, 2021). This tax is paid to the seller at the point of sale, and the seller passes the money to the government. Property taxes are imposed on the volume of real estate or other property on a recurring basis (Fay, 2021).
Progressive and Regressive Taxes
Progressive taxes are those that increase when the income of a person increases, while tax rates of regressive taxes increase as a person’s income decreases (Turbotax, 2021). The most progressive tax is income tax, as it differs between 10% and 37% for US citizens (Turbotax, 2021). The higher a person’s income, the large percentage of this income is to be paid as taxes. The most regressive tax is sales tax, even though everyone pays the same 7% in the US. The issue is that everyone has to pay $70 for a $1,000 TV. For instance, one person earns $2,000 per month, and another one earns $5,000. This tax would be 3.5% of the first person’s income, while it would be 1.4% of another person’s income.
Why Some States Do Not Have Income Tax
Income tax can be imposed by both the federal government and the state. Some states prefer to avoid imposing income states. These states become more attractive for businesses and workers. According to Foster and Garcia (2021), there are nine states that do not have an income tax, and four of them are among the top ten economically prosperous states. States without an income tax are also known to have had a higher growth rate for the past two decades (Foster & Garcia, 2021). Thus, I believe that Kansas can do the same thing to attract more workers and businesses.
Fay, B. (2021). Types of taxes. Debt.org. Web.
Foster, S., & Garcia, A. (2021). Is a state with no income tax better or worse for your finances? Bankrate. Web.
Turbotax. (2021). Understanding progressive, regressive, and flat Taxes. Web.