Direct taxes are paid directly by whom?

• A. The government
• B. An individual
• C. A corporation
• D. The community fund

Answer: (B)

Direct taxes are paid straight to the government by the person who owes them. The clearest example is personal income tax, where an individual’s earnings are taxed and the payment goes directly from the taxpayer to the tax authority. This is what makes it a direct tax: the payer and the taxed person are the same, rather than the tax being collected via a price charged by a seller. Indirect taxes are different because they’re built into prices and collected by sellers or intermediaries, then passed on to the government. While corporations also pay direct taxes on profits, in everyday terms the example most people recognize is an individual paying income tax. The other options don’t fit because the government doesn’t pay taxes, and a community fund isn’t how direct taxes are typically described.