Which type of tax is typically paid to a third party, rather than directly to the government?

• A. Income tax
• B. Direct tax
• C. Indirect tax
• D. Flat tax

Answer: (C)

Verified step by step guidance

1. Understand the difference between direct and indirect taxes: Direct taxes are paid directly by individuals or organizations to the government, such as income tax or property tax.
2. Recognize that indirect taxes are collected by an intermediary (a third party) from the person who ultimately bears the economic burden of the tax, and then passed on to the government.
3. Identify examples of indirect taxes, such as sales tax, value-added tax (VAT), or excise duties, which are typically included in the price of goods or services and collected by sellers or producers.
4. Note that income tax and flat tax are types of direct taxes because they are paid directly by the taxpayer to the government without an intermediary.
5. Conclude that the tax typically paid to a third party rather than directly to the government is an indirect tax.