Taxes – Start Here SH!

 

 

 

Terminology

 

  • taxfoundation.org/taxedu/glossary/
  • All taxes can be divided into three basic types: taxes on what you buy, taxes on what you earn, and taxes on what you own. Watch our basic tax types video!
    taxfoundation.org/taxedu/videos/tax-types/
  • These three categories are proportional taxes, progressive taxes, and regressive taxes. study.com/academy/lesson/principles-and-systems-of-taxation.html
  • google.com/search?q=three+taxation+principles+nationality+domicile
  • taxfoundation.org/blog/how-countries-define-their-income-tax-borders-0/
    • Throughout the world, there are three general ways a country defines its “tax borders.”

      Under a citizen-based tax system, all income earned by citizens, whether they live in the country or not, is taxed in their home country. Even if they move outside of the country and earned all their income in a foreign country, it still is subject to tax in their home country.

      Countries with citizen-based taxation (such as the United States) provide a foreign-earned income exemption (in 2015 is was about $100,000). In addition, individuals receive a tax credit equal to the income tax they already paid on their income to a foreign country to prevent double taxation.

      Most countries have residence-based income taxes. Under this system, individuals must pay taxes on their worldwide income to the country in which they live, whether they are a citizen or not. If they move out of the country, they no longer have to pay tax to that country on any income they earn outside of that country.

      As with the citizen-based tax systems, residence-based systems provide tax credits equal to the income taxes an individual has already paid on their foreign source income.

      Some countries have what is called a territorial income tax. This type of tax only taxes the income earned inside the country, regardless of who earns it. Any income earned outside of the country, even by residents or citizens, is exempt from taxation. For the taxation of individuals, this type of system is also uncommon throughout the world.

 

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