Taxes, a necessary component of modern society, act as the primary source of income to the powers in charge. Taxes are the lifeblood of a functioning economy, as it allows the governing body to fund infrastructure, pay for public services and services, and support social welfare. Taxes vary across different countries, depending on the fiscal policy and government of the nation. This essay will be discussing the taxation structure of the United States of America and the intricate laws, rules and regulations system governing it.
The United States has a unique taxation system, which is based on voluntary compliance. Individuals and corporations in the United States are required to indicate and pay the applicable taxes set forth by the Internal Revenue Service, or the IRS. The IRS is the official agency responsible for collecting taxes, which is supervised directly by the Department of the Treasury. American citizens and corporations must submit required financial documents to the IRS in order to maintain accurate account of the taxes due.
In the US, there are generally three types of taxes: income taxes, payroll taxes and property taxes. These taxes are all administered by the IRS, each with their own set of rules and regulations. Income taxes specifically apply to all individuals who earn a regular source of income. The income tax rate varies depending on the individual’s income bracket and is applied as percentage of the total income. This percentage can range from 10% to 37% or higher.
Payroll taxes, on the other hand, are required for most employees of a company. In essence, these are taxes that are withheld from an employee’s salary and are applied to contribute towards a variety of public and social services such as, Social Security, Medicare and Unemployment Insurance. The rate of the payroll tax depends on the individual’s salary, and usually ranges from 6.2% to 8.1%.
Finally, property taxes are generally imposed on every individual that owns a piece of real estate or a non-personal asset. This can range from a primary residence to a second home, land or stock, and any associated home improvements. Property taxes are usually imposed and collected by local government and is used to pay for essential public services.
The US government also taxes certain goods and services at the federal, state and local levels. These are called excise taxes and are collected in form of a percentage of the total sale in order to regulate the prices and control any potential monopoly. These are applied to different items and vary greatly from state to state. The most commonly taxed good in the US is tobacco, with some states levying up to 400% excise tax on tobacco products.
In addition to these taxes, the United States also imposes a variety of fees such as, license fees, toll fees, registration fees, etc. All of these taxes and fees contribute to the overall taxation burden borne by the people. It is estimated that the US spends around 9.8% of its GDP on taxes, which is significantly greater than other developed countries such as, UK, Germany and Japan.
In conclusion, the taxation system of the US is quite complicated and intricate. From income taxes to property taxes to excise taxes, there are quite a few different levies imposed on the citizens of the US. It is essential to understand the different types of taxes, their rates and the regulations associated with each one in order to ensure proper compliance.
