Governments levy many kinds of taxes. The most important kinds include property taxes, income taxes, and taxes on transactions.

          Property taxes are levied on the value of such property as farms, houses, stores, factories, and business equipment. The property tax first became important in ancient times. Today, it ranks as the chief source of income for local governments in the United States and Canada. Most states of the United States and provinces of Canada also levy property taxes. Property taxes are called direct taxes because they are levied directly on the people expected to pay them.

Income taxes are levied on income from such sources as wages and salaries, dividends, interest, rent, and earnings of corporations. There are two main types of income taxes--individual income taxes and corporate income taxes. Individual income taxes, also called personal income taxes, are applied to the income of individuals and families. Corporate income taxes are levied on the earnings of estates and trusts. Income taxes generally are considered to be direct taxes.

Most nations in the world levy income taxes. In the United States, income taxes are levied by the federal government, most state governments, and some local governments. Many people and businesses in the United States also pay special income taxes that help fund Social Security programs. These taxes are known as Social Security contributions or payroll taxes. In Canada, income taxes are levied by the federal government and by the country’s 10 provincial governments.

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