what is difference between income tax and sales tax. and what is its ratio?

Answer 1

Income Tax is on money you earn working/investing. Most people figure a ballpark of 20%. When a person wins a certain amount of money at a horse track they take 20% before giving your payout and you receive a receipt so you may get some back at the end of the year. This money is used for Federal Expenditures like; Freeways and national security and pays Federal Employees.
Sales Tax is when you buy things it depends on your State, City and County. Many figure a ballpark of 10%. Where I live it about 8% on most purchases and 12% on prepared foods like a restaurant or McDonald's. This money is used for local expenditures within the specific State, being divided accordingly to State, City and County and pays for things like; State and County roads, State Employees and Teachers, Parks etc.

Answer 2

Income tax is based on a percentage of the income you make as well as other factors called deductions. Deductions reduce the amount of tax you pay to the government. Deductions can include children, school expenses, medical expenses, mortgage interest etc..
Sales tax is a set percent of the purchase price of an item. Reates vary - some states have 0% - some as high as 8 or 9%.

This being the case, there is no direct ratio between the two.

Answer 3

Income tax is based on income production, whereas sales tax is based upon product consumption. In the USA, these taxes are levvied and collected at the municipal, county, state and (for income tax) national levels depending upon the source of income and tax laws in your area.

There is no fixed ratio between these taxes, especially since additional taxes (property, school, etc.) and rates vary across the country. This is one reason why it is "cheaper" to live in some areas of the country as compared to others.

Answer 4

The difference is one of timing, and also the incentives or disincentives each has.

Income tax hits your income - before you have a chance to invest it, spend it, or save it. And since there's not as much money left after, it discourages investing or saving.

A sales tax hits you only on money you spend once you get it. If you don't spend much, you don't pay much tax. This encourages people to save or invest their money, which makes more money available to borrowers. It's a good way to help vitalize an economy.

For a more thorough understanding of all of this, take a basic economics class. Unless you're doing that now, and this is just a quick way to help you get your homework done, of course. In which case, mention the marginal propensity to cheat in your answer, and your prof will be very impressed!