The Essentials of Government Taxes Taxes are financial charges or levies billed to an individual citizen or legal businesses which are implemented as compulsory by the government. It simply means that people today who are making enough money are demanded to give a part of it back to the government. The word tax is made from the Latin taxo which signifies a “charge” or a “rate”. These so-called tax charges are collected by states or anything that functions like a state to fund various public expenditures. The government’s capability to bring up taxes is called as fiscal capacity. The money offered by taxation will help boost the financial profits to provide for the government in executing many functions. The government capabilities consist of establishing economic infrastructure (roads, public transportation, sanitation, legal systems, public safety, education, health care systems), supply education, sustain law and order, administration, defense, and so on. Various governments use various forms of taxes. The charges of the income tax enforced on taxpayers always differ. This is generally so depending on the income or profits of an individual or a legal business that is considered taxable. It is important to determine what portion of the income is taxable and what is free of taxes. The process of giving the necessary portion of the taxpayer’s income back to the government is done by the usual way of filing an income tax return. The total of tax that taxpayers are responsible for is computed based from the details found in the income tax return. An individual can calculate these tax charges, or the government’s Internal Revenue department can do it for them.
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Deliberate misrepresentation of the true state of a taxpayer’s financial affairs to the tax authorities is considered an illegal act of tax evasion and is punishable by law. Tax evasion involves fraudulent tax reporting, stating less earnings, gains or profits than the amounts truly attained, or overstating deductions to lower the tax liability. The consequence for illegal evasion of taxes may differ in distinct countries includes paying out substantial fines and even imprisonment.
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The best example of a tax evasion case happened in the United States involving the infamous and legendary criminal mastermind Al Capone. In the 1930’s, Capone has nearly the whole city of Chicago under his control, while he supplies illegal liquor. With a number of corrupt government officials and policemen under his pocket, he seemed untouchable. On the other hand, Capone has not submitted an income tax return for several years and the federal authorities, with the purpose of jailing him, began establishing up a tax evasion case against him. Al Capone was convicted on tax evasion and sentenced to 11 years in federal prison.