How the Government Uses Direct and Indirect Taxes

Posted on May 19, 2021 by Guy Atkinson

A tax is a mandatory financial burden or any kind of levy paid on a taxpayer by some governmental body in order to finance government expenditure and various other public needs. A person who is charged with tax evasion is punished by law with a prison term of up to three years. Evasion of or refusal to pay tax, and prison term, are both punishable by law. If you have been charged with tax fraud, it is important to contact a tax lawyer. They can guide you throughout the investigation, proceedings, and any proceedings that may result after the charges have been filed against you.

Tax evasion can also occur with respect to property transactions. For instance, if a tax payer buys some property in Arizona and fails to report the purchase as a taxable sale, such property can be subject to a property valuation assessment by the Arizona Board of Equalization, which uses the value of the home as its basis for computing the senior citizen’s taxable estate sale amount. This valuation may result in a much higher tax debt owed to the Government because of the possibility that the property may not be sold at all. The tax office and the attorney handling the case of the charge would have the authority to file an appeal if the valuation is found to be inaccurate and excessive.

Tax evasion is a serious offence in many jurisdictions. In the United States, revenue agents are empowered to investigate tax fraud, money laundering, tax evasion, fraudulent, and any other offenses related to the payment of taxes. If you become the target of such an investigation, it is in your best interests to seek professional legal counsel as soon as possible. Currently, in Arizona, state law enforcement does not yet have sufficient resources to investigate and prosecute individuals accused of committing tax fraud, unless there is strong evidence linking them to the crime.

As outlined in the Internal Revenue Service (IRS) website, “the concept of income tax includes a person’s gross income, but the term also includes income of an individual from various other sources”. The website goes on to say, “The term ‘income’ includes all income derived by an individual from all sources”. It is the intent of the Internal Revenue Service (IRS) to allow individuals to deduct from their income taxes from their wages by applying what they know as Schedule A to compute their tax liability on their own. The intention is for the individuals’ tax liability to be equal to the amount of income which is subject to tax. Although individuals cannot deduct their interest or dividends, they may claim deductions for the regular payments they make to other individuals such as charitable organizations or government agencies.

One of the ways that the United States government funds programs is through the indirect tax system. Indirect taxes are taxes that are not fully understood by citizens and are collected by the federal government. Examples of indirect taxes include customs, import and export duties, and tariffs. Examples of direct taxes include income taxes, capital gains, payroll taxes, and estate taxes. The goal of the indirect tax system is to change the behavior of citizens so that they will pay more attention to how the money they are spending is being spent.

There are many ways in which the government uses indirect taxes to accomplish their goals. From increasing tariffs to collecting rents from property owners in order to pay for programs, indirect taxes are a major component of the American government. Learn more about how the government uses indirect taxes today!

Tip of the Day

Time management for Finance Professionals

time management


I’ve just re-read Richard Denny’s fantastic book ‘Selling to Win’, in which he mentions a time management technique that I learnt many, many years ago from an old boss of mine.


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