Direct taxation

Direct taxation

Direct taxation is a system of taxation in which individuals or entities are required to pay taxes directly to the government. It is the opposite of indirect taxation, in which taxes are imposed on goods and services, and the cost of those taxes is passed on to the consumer.

In direct taxation, individuals and entities are taxed on their income, property, or assets. Examples of direct taxes include income tax, property tax, estate tax, and gift tax. These taxes are typically progressive, meaning that those with higher incomes or greater wealth are taxed at a higher rate than those with lower incomes or less wealth.

Direct taxation is used by governments to raise revenue to fund public services and infrastructure. It is also used as a tool to promote economic equality by redistributing wealth from those who have more to those who have less. However, direct taxation can be controversial, with some arguing that it discourages investment and economic growth, while others believe it is necessary for a fair and just society.