Final answer:
A common characteristic of taxable entities is their liability to pay taxes on income or profits. Businesses additionally face other taxes like property, payroll, and excise taxes. These taxes fund essential government services at all levels.
Step-by-step explanation:
In the context of taxable entities, such as corporations and businesses, a common characteristic is their liability to pay taxes on income or profits. All companies doing business within a country are generally required to pay corporate taxes on the income earned from that country. The income that is subject to taxation typically resembles the determination of taxable income for individuals, and is usually based on net profits.
Apart from corporate taxes, businesses may also be obliged to pay other types of taxes like property tax, payroll tax, excise tax, and value-added tax (VAT). However, these are not specifically referred to as corporate taxes. The requirement to pay taxes stems from principles such as the benefit principle of taxation, which suggests that taxes should be paid by those who receive government benefits, and the ability-to-pay principle, asserting that those with greater financial means should contribute more in taxes.
There are generally three types of taxes businesses encounter: proportional tax, where the tax rate is constant regardless of income level; progressive tax, with higher rates applied to higher income levels; and regressive tax, where lower income earners pay a higher percentage of their income. Taxes provide vital revenue for federal, state, and local governments, funding various services and infrastructure.