Benchmarking, Types of Taxes

              An income tax is a tax levied on the income of individuals or businesses (corporations or other legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs). Various systems define income differently, and often allow notional reductions of income (such as a reduction based on number of children supported).

Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. Improvements from learning mean doing things better, faster, and cheaper.

Benchmarking involves management identifying the best firms in their industry, or any other industry where similar processes exist, and comparing the results and processes of those studied (the "targets") to one's own results and processes to learn how well the targets perform and, more importantly, how they do it.

The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes. Benchmarking is most used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.

Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.

By Flat Tax or Flat Rate Tax it is indicated that the taxes on household income and corporate profits are fixed at a constant rate. Generally household income below a statutorily fixed level on the basis of the type and size of the household, are exempted from paying Flat Taxes.

Taxes Paid by the Individual

There are 7 types of taxes that are paid for by an individual.

1. Income Taxes: These taxes are paid out by anyone who earns an income by any means. April 15th is the day that income tax filings are due in the United States, and anyone earning income needs. Income taxes are subject to deductions and tax credits; they are usually not paid by people under a certain income or who have special situations such as a disability.

2. Property Taxes: These are paid by anyone who owns property such as land, a home or commercial real estate. These taxes are often collected by the state and county to help fund their budgets. While income taxes are subject to deductions or credits, these taxes are often fairly rigid. Licensing fees on cars, recreational vehicles and watercraft are property taxes as well.

3. Consumptive Taxes: These are taxes on sales goods or items that are subjected to being used by either an individual or business. While everyone understands that a small amount of money is added on to the purchase of goods in the stores, many people overlook other taxes. A fishing or hunting licesnse is a tax. Toll road fees are a tax, even if they call it a user fee. So are travel fees.

Taxes Paid by Businesses

Some of the other 7 types of taxes are those paid by businesses

4. Corporate Taxes: All business structures pay taxes on the income made in that particular business. Tax consequences are important when structuring a business. For example, sole proprietorships will pay their taxes through their regular income taxes, while a S-corporation pays quite differently. An C-corporation is best held by shareholders because of tax implications. Of all of the seven types of taxes, this one is usually the one that requires the use of a professional to figure out the complicated tax requirements.

5. Payroll Taxes: These taxes are taken out by the businesses before income is distributed to the individual in exchange for the work that was done. These are commonly called "FUDA" and "FICA" and businesses need to match a certain amount of these payroll taxes. This is an additional cost of having an employee, and one reason why "independant contractors" have become so popular. These payroll taxes must be paid by the individual contractor if the regular business is not paying them. "FUDA" and "FICA" fund social security and other similar programs.

7 Main Types of Taxes: Other Taxes

6. Capital Gains taxes are paid on investments that have appreciated. Frequently these investments have been sold. Examples would be stocks, bonds, and real estate. Most losses can be "written off" on the federal income tax level, and like corporate taxes, these are usually best handled by professional tax prepares.

7. Inheritance or Estate Taxes: Of the 7 types of taxes, this is the only type where a tax can happen because of a death. A certain amount of estate money that may be passed on with no tax consequence. Once that level is met, however, the taxes are usually quite steep. Life insurance is often used to offset inheritance taxes, and is one reason insurance is so critical in estate planning.

While few people relish paying taxes, everyone enjoys having good schools, roads and services. In the end, taxes improve our overall quality of life.