A small business pays a fixed tax of $500 annually, regardless of its profits. Which category does this tax fall into, and why is it classified this way?

The tax that the small business pays, which is a fixed amount of $500 every year, is called a lump-sum tax. This type of tax is classified as a "fixed tax" because it does not change based on the business's income or profits. For example, whether the business makes $1,000 or $100,000, it still pays the same $500 tax. This classification is important because it simplifies the tax process for the business, making it predictable and easy to budget for. Unlike other taxes that depend on how much money a business makes, a lump-sum tax treats all businesses equally, regardless of their financial situation.