Which term refers to taxes on the income and wealth of individuals and firms?

Which term refers to taxes on the income and wealth of individuals and firms?

• A. Direct Taxes
• B. Indirect Taxes
• C. Subsidy
• D. Tax

Answer: (A)

Direct taxes are taxes charged on the income and wealth of individuals and firms and paid directly to the government by the person or business that earns the income or owns the wealth. This means the taxpayer themselves owes the payment, not the tax being added to a price of something they buy. For example, income tax on salaries and corporate tax on a company’s profits are direct taxes. Indirect taxes are different because they’re levied on goods and services and included in prices, so the payment passes through to consumers via higher prices. A subsidy is money given by the government to support activities, not a tax. The broad word tax covers both direct and indirect types, but the specific term for taxes on income and wealth is direct taxes.

Direct taxes are taxes charged on the income and wealth of individuals and firms and paid directly to the government by the person or business that earns the income or owns the wealth. This means the taxpayer themselves owes the payment, not the tax being added to a price of something they buy. For example, income tax on salaries and corporate tax on a company’s profits are direct taxes. Indirect taxes are different because they’re levied on goods and services and included in prices, so the payment passes through to consumers via higher prices. A subsidy is money given by the government to support activities, not a tax. The broad word tax covers both direct and indirect types, but the specific term for taxes on income and wealth is direct taxes.