Different Types of Taxes | Issac Qureshi

Taxes are a defining feature of American life. From our grocery bills to our paychecks, taxes apply to most day-to-day financial transactions. However, it is essential that people know the different types of taxes, how they apply to common purchases, and how taxation affects overall wealth. Taxes apply to most forms of wealth and income, and most people should expect to pay funds toward Federal income tax, state and local income taxes, payroll taxes, and self-employment taxes at some point in their lives. Most forms of taxation fall into three categories: progressive taxes, flat or proportional taxes, and regressive taxes. Here’s what folks need to know.

Flat or Proportional Taxes

A flat tax is also called a proportional tax. In this type of taxation, the amount a person pays is proportional to the amount of income they earn. For example, under a flat tax, a person making $10,000 and a person making $100,000 might both pay 5% in taxes. As such, the person who makes $10,000 will pay $500, while the person who makes $100,000 will pay $5,000. Each person pays the same percentage of their income as tax.

Progressive Taxes

Progressive taxes rely on the concept that the high an income, the higher the tax percentage. In other words, as taxable income increases, so does the tax rate. In the United States, this applies primarily to income tax, which is often calculated and deducted by a person’s employer. Progressive taxes apply to certain tax brackets. For example, in 2022, a person making around $40,000 should expect to pay an income tax rate of 22%. By contrast, a person making $85,525 should expect to pay an income tax rate of 24%.

Regressive Taxes

A regressive tax is the opposite of a progressive tax. This type of tax relies on the idea that the more capital a person has that is subject to tax, the lower the average tax rate. Social Security is a great example of this type of tax. This payroll tax is deducted from a person’s overall pay. For the first $147,000 a person makes in 2022, they will pay a certain amount toward Social Security tax. But, if a person’s income exceeds this limit, they will pay a lower average rate on overall income tax.

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About Issac Qureshi

Issac Qureshi is an experienced and dedicated business professional with a laundry list of skills that have helped him throughout his career. The knowledge and the experience that he's gained through the years have served as a sturdy foundation for him to grow off of. He's incredibly passionate about marketing, business, and finance. Issac understands just how important knowledge can be, and is always looking to learn and grow, even holding multiple degrees. Currently, Issac Qureshi is the founder of both Ogilvy & Haart and Hemingway UAE.

Ogilvy & Haart was founded in 2014, and is a London-based strategic wealth solutions and taxation consultancy firm. The company has grown large enough to have a wealth of knowledge on myriad topics, but is also small enough to give everyone they serve a highly personalized experience. They offer investment planning, accountancy service, estate planning, and taxation strategy, providing guidance on financial decisions like education, taxes, investments, estate & inheritance, business, insurance, and wills.

Founded in 2020, Hemingway UAE goes in the other direction, as a hedge fund company. Hemingway is a privately-owned investment firm that manages, sells, and markets funds to its private clients. This company was founded on four basic principles: Preparation, Testing, Investment, and Growth. All of these principles are in use daily to ensure that the solutions that are offered to clients are done so with a basis of careful planning, implementation, and investment when it comes to the relationship with the client.

To learn more about Issac Qureshi, be sure to visit his websites!