So corporation tax refers to the tax imposed on earnings from business activity by the joint stock companies or business corporations. For income tax (personal or individual income tax or corporation tax), income is regarded as an ideal index of a tax payer’s capacity to pay.
Consumption tax may take the form of expenditure or spending tax. Here expenditure or spending is regarded as an ideal index of taxpaying capacity. Expenditure is treated as a better measure of taxpaying capacity than income.
Similarly, taxes on property may be sub-divided into four classes, namely (a) wealth tax, (b) death duty, (c) gift tax and (d) others.
Wealth tax is also called property tax or capital tax. The basis of wealth tax is valuation of additions to property, wealth or capital. Again wealth or capital tax may be of two types like (i) annual capital tax and (ii) capital levy.
In both the cases, this tax is assessed on the net wealth of the individual. Capital levy is a once-for-all charge which is imposed by government as an emergency measure.
Death duty and gift taxes are only two types of wealth tax. Death duties are imposed on property when it passes hands from one person to another at the time of death of the former.
There are two major forms of death duty, like (i) estate duty and (ii) inheritance tax.’ In case of estate duty, the charges are imposed on the entire estate when its owner dies.
Inheritance tax is levied separately on as many shares as there might be inheritors to the property of the deceased. Gift tax arises due to gift of resources given by one person to another person. Like death duty, gifts are unearned income.
There are other types of property taxation like land revenue, betterment levy (this is a tax on unearned income or a type of capital gains arises due to increase in the value of real estates of the people living in the locality) etc. So personal income tax, corporation tax, consumption tax, wealth tax, death duty, gift tax, land revenue etc are examples of direct taxes.