What is a IRS Direct Tax?
As the name suggest, direct taxes are those taxes which are directly imposed on the person. Such taxes are directly paid by the person on whom the taxes are imposed. Unlike indirect taxes, they cannot be shifted on anyone else.
Three basic advantages of Direct Taxes
Advantage no. 1: In Accordance with the Canon of Equality
The canon of equality states that the taxes should be implied on the basis of equality. The rich should pay more taxes, while the poor shouldn’t. A direct tax is concretely in accordance with the canon of equality. The Direct tax are imposed specifically to persons who belong to specific categories and income-groups, it serves the purpose of justice and equality.
Advantage No. 2: Affects Savings and Investments
Direct taxes directly affect the level of savings and investment for an individual and the economy. When the Direct taxes increase, people have to pay more for their income and they are left with less amount of money in savings, on the other hand when the a direct tax is decreased, the person has been left with more money to save, and hence, the investment level of the economy is increased.
Advantage No. 3: Direct Taxes create Social Awareness
Direct tax creates social awareness among the general public. When people pay a certain amount of money to government they expect some social reforms in return. The citizens tend to feel more socially aware and responsible. Direct tax has been proven to be a positive contributing factor in lesser crimes, littering and damaging public goods.
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