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Encyclopedia > Taxation in the United States
Taxation in the United States

This article is part of a series on
Taxation Image File history File links US-GreatSeal-Obverse. ... A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. ...


Federal taxation
Authority · History
Internal Revenue Service
Court · Forms · Code · Revenue
Income tax · Payroll tax
Alternative Minimum Tax
Estate tax · Excise tax
Gift tax · Corporate tax
Capital gains tax
State & local taxation
State income tax · State tax levels
Sales tax · Use tax · Property tax

FairTax · Flat tax Throughout this article, the unqualified term dollar and the $ symbol refer to the United States dollar. ... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion on income), as opposed to a graduated, or progressive, scheme. ...


Tax protester arguments
Constitutional
Statutory · Conspiracy Tax protester arguments are a number of theories that deny that a person has a legal obligation to pay a tax for which the government has determined that person is liable. ... Tax protesters in the United States make a number of statutory arguments that the assessment of the income tax in the United States violates the statutes enacted by the United States Congress and signed into law by the President. ... Tax protester conspiracy arguments are arguments raised by tax protesters that assert that the imposition of the income tax in the United States is the result of some kind of illicit conspiracy. ...



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Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation. United States taxation includes local government, possibly including one or more of municipal, township, district and county governments. It also includes regional entities such as school and utility, and transit districts as well as including state and federal government. Local governments are administrative offices that are smaller than a state or province. ... It has been suggested that this article or section be merged into Local government of the United States. ... A township in the United States refers to a small geographic area, ranging in size from 6 to 54 square miles (15. ... Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      The political units and divisions of the United States include: The 50 states... United States of America, showing states, divided into counties. ... School districts are a form of special-purpose district in the United States (amongst some other places) which serves to operate the local public primary and secondary schools. ... Generally a special-purpose district, also known as a special district, is a type of district differing from general-purpose districts like municipalities, counties, etc. ... Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      A U.S. state is any one of the fifty subnational entities of... United States Government redirects here. ...


The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income.[1][2] The Tax Foundation concluded that government at all levels will collect 30.8% of the nation's income for 2008.[3] The National Bureau of Economic Research (NBER) is a private, nonprofit, nonpartisan research organization dedicated to studying the science and empirics of economics, especially the American economy. ... In the tax system and in economics, the marginal tax rate refers to the increase in ones tax obligation as ones taxable income rises: marginal tax rate = Δ(tax obligation)/Δ(taxable income) This can be measured either by looking at the published tax tables (to get the official marginal... The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ...

Contents

Federal taxation

History

Main article: Taxation history of the United States

The first federal statutes imposing the legal obligation to pay a federal income tax were adopted by Congress in 1861 and 1862 to pay for the Civil War. The 1862 law levied a 3% tax on incomes above $800, rising to 5% for incomes above $10,000. Rates were raised in 1864. This income tax was repealed in 1872, but a new income tax statute was enacted as part of the Wilson-Gorman Tariff Act in 1894.[4] Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        The history of taxation in the United States began when it was composed of colonies ruled by the British Empire, French Empire, and Spanish Empire. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        An income tax is a tax levied on the financial income... The Revenue Act or Wilson-Gorman tariff of 1894 slightly reduced the U.S. tariff rates from the numbers set in the 1890 McKinley tariff. ...


The United States Constitution specified Congress could impose a "direct" tax only if it was apportioned among the states according to each state's census population.[5] In its 1895 decision the Supreme Court held in the case of Pollock v. Farmers' Loan & Trust Co. that a tax on income from property (a tax on interest, dividends or rent) was a direct tax under the Constitution, and so had to be apportioned. Wikisource has original text related to this article: The United States Constitution The United States Constitution is the supreme law of the United States of America. ... The United States Census is a decennial census mandated by the United States Constitution. ... Holding --- Court membership Case opinions Laws applied --- Pollock v. ...


The apportionment requirement made income taxes on property practically impossible, and Congress did not want to limit the income tax solely to a tax on wages. Therefore, in 1909 Congress proposed the Sixteenth Amendment, which became part of the Constitution in 1913 when it was ratified by the required number of states. The Amendment modified the requirement for apportionment of direct taxes by exempting all income taxes—whether considered direct or indirect—from the apportionment requirement. Congress re-adopted the income tax that same year, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. By 1918, the top rate of the income tax was increased to 77% (on income over $1,000,000) to finance World War I. The top marginal tax rate was reduced to 58% in 1922, to 25% in 1925, and finally to 24% in 1929. In 1932 the top marginal tax rate was increased to 63% during the Great Depression and steadily increased, reaching 94% (on all income over $200,000) in 1945. During World War II, Congress introduced payroll withholding and quarterly tax payments. Top marginal tax rates stayed near or above 90% until 1964 when the top marginal tax rate was lowered to 70%. The top marginal tax rate was lowered to 50% in 1982 and eventually to 28% in 1988. Amendment XVI in the National Archives The Sixteenth Amendment (Amendment XVI) of the United States Constitution was ratified on February 3, 1913. ... A surtax, in its simplest form, is essentially a tax levied upon a tax. ... “The Great War ” redirects here. ... For other uses, see The Great Depression (disambiguation). ...


At first the income tax was incrementally expanded by the Congress of the United States, and then inflation automatically raised most persons into tax brackets formerly reserved for the wealthy until income tax brackets were adjusted for inflation. Income tax now applies to almost two-thirds of the population.[6] The lowest earning workers, especially those with dependents, pay no income taxes as a group and actually get a small subsidy from the federal government because of child credits and the Earned Income Tax Credit. Congress in Joint Session. ... The United States federal Earned Income Tax Credit (EITC) is a refundable tax credit that reduces or eliminates the taxes that low-income married or single working people pay (such as payroll taxes) and also frequently operates as a wage subsidy for low-income workers. ...


Some lower income individuals pay a proportionately higher share of payroll taxes for Social Security and Medicare than do some higher income individuals in terms of the effective tax rate. All income earned up to a point, adjusted annually for inflation ($94,200 for the year 2006 and $97,500 for the year 2007) is taxed at 7.65% (consisting of the 6.2% Social Security tax and the 1.45% Medicare tax) on the employee with an addition 7.65% in tax incurred by the employer. The annual limitation amount is sometimes called the "Social Security tax wage base amount" or "Contribution and Benefit Base." Above the annual limit amount, only the 1.45% Medicare tax is imposed. In terms of the effective rate, this means that a worker earning $20,000 for 2006 pays at a 7.65% effective rate ($1,530) while a worker earning $200,000 pays at an effective rate of about 4.37% ($8,740). Social Security, in the United States, currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... President Johnson signing the Medicare amendment. ...


When an individual's Social Security benefit is calculated, income in excess of each year's Social Security Tax wage base amount (e.g., $97,500 for 2007) is disregarded for purposes of the calculation of future benefits. Although some lower income individuals pay a proportionately higher share of payroll taxes than do higher income individuals in terms of the "effective tax rate", the lower income individuals also receive a proportionately higher share of Social Security benefits than do some higher income individuals, since the lower income individuals will receive a much higher income replacement percentage in retirement than higher income individuals affected by the Social Security tax wage base cap. If the higher income individuals want to receive an income replacement percentage in retirement that is similar to the income replacement percentage that lower income individuals receive from Social Security, higher income individuals must achieve this through other means such as 401(k)s, IRAs, defined benefit pension plans, personal savings, etc. As a percentage of income, some higher income individuals receive less from Social Security than do lower income individuals.


Self employed people pay the entire 15.3%, but are allowed to deduct one-half of this amount in computing taxable income for purposes of the Federal income tax.[7]


The federal government is now financed primarily by personal and corporate income taxes. While it was originally funded via tariffs upon imported goods, tariffs now represent only a minor portion of federal revenues. There are also non-tax fees to recompense agencies for services or to fill specific trust funds such as the fee placed upon airline tickets for airport expansion and air traffic control. Often the receipts intended to be placed in "trust" funds are used for other purposes, with the government posting an IOU ('I owe you') in the form of a federal bond or other accounting instrument, then spending the money on unrelated current expenditures. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        An income tax is a tax levied on the financial income... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        For other uses of this word, see tariff (disambiguation). ... In common law legal systems, a trust is a relationship in which a person or entity (the trustee) has legal control over certain property (the trust property or trust corpus), but is bound by a fiduciary duty to exercise that legal control for the benefit of someone else (the beneficiary... It has been suggested that this article or section be merged into Ticket (admission). ... For the Canadian musical group, see Air Traffic Control (band). ... Look up IOU in Wiktionary, the free dictionary. ... It has been suggested that Accounting scholarship be merged into this article or section. ...


The federal government collects several specific taxes in addition to the general income tax. Social Security and Medicare are large social support programs which are funded by taxes on personal earned income. Estate taxes are levied on inheritance. Net long-term capital gains as well as certain types of qualified dividend income are taxed preferentially. Social Security, in the United States, currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... President Johnson signing the Medicare amendment. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... This article or section does not adequately cite its references or sources. ... In finance, a capital gain is profit that results from the appreciation of a capital asset over its purchase price. ... This article is about financial dividends. ...


Federal excise taxes are applied to specific items such as motor fuels, tires, telephone usage, tobacco products, and alcoholic beverages. Excise taxes are often, but not always, allocated to special funds related to the object or activity taxed. An excise is an indirect tax or duty levied on items within a country. ...


Federal tax code

The Federal tax law is administered primarily by the Internal Revenue Service, a bureau of the Treasury. The U.S. tax code is known as the Internal Revenue Code of 1986 (title 26 of the United States Code). The Code's complexity generally arises from two factors: the use of the tax code for purposes other than raising revenue, and the feedback process of amending the code. Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        IRS redirects here. ... The U.S. Treasury building today. ... The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes... The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal law of the United States. ...


While the main intent of the law is to provide revenue for the federal government, the tax code is frequently used for public policy reasons i.e., to achieve social, economic, and political goals. For example, to encourage home ownership, the tax law provides a deduction for mortgage interest expense on debt secured by primary residences. In addition, the law does not allow a deduction for renters for rent paid to offset the advantage of nonrecognition of exclusion of imputed owner occupied rent. An income tax system that favors neither renting nor owning homes would not allow the mortgage interest deduction and would tax the imputed rent for owners who live in their own homes. Social policy is the study of the welfare state, and the range of responses to social need. ... Not to be confused with Political economy. ... Politics is the process by which decisions are made within groups. ... An owner-occupier is a person who lives in a house that he or she owns. ... A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. ... A mortgage loan is a loan secured by real property through the use of a mortgage (a legal instrument). ...


Because the government uses the tax code as an instrument of social policy, the code as a whole appears to some critics[citation needed] to lack a coherent organizing principle. The purported lack of a coherent organizing principle arguably has become magnified over time, due to the interplay between successive legislative amendments and regulatory changes to the law and the private sector responses to those amendments and changes. For instance, suppose that Congress enacts a tax credit to encourage a particular type of activity. In response, a group of taxpayers who are not the intended beneficiaries of the credit re-order their affairs, or the superficial aspects of their affairs, to qualify for the credit. Congress responds by amending the code to add restrictions and target the credit more effectively. Certain taxpayers manage to use this change to claim additional benefits, so Congress acts again, and so on. The result is a feedback loop of enactment and response, which, over an extended period of time, produces significant complexity. Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is an item which is treated as a payment already made towards taxes owed. ... In cybernetics and control theory, feedback is a process whereby some proportion or in general, function, of the output signal of a system is passed (fed back) to the input. ...


Tax distribution

Tax concentration coefficient (a variant of the Gini coefficient) is a measure of tax inequality. The higher the number, the more progressive the tax.
Tax concentration coefficient (a variant of the Gini coefficient) is a measure of tax inequality. The higher the number, the more progressive the tax.

There are about 117 million taxpayers in the United States.[8] The Treasury Department in 2006 reported, based on Internal Revenue Service (IRS) data, the share of federal income taxes paid by taxpayers of various income levels. The data shows the progressive tax structure of the U.S. federal income tax system on individuals that reduces the tax incidence of people with smaller incomes, as they shift the incidence disproportionately to those with higher incomes - the top 0.1% of taxpayers by income pay 17.4% of federal income taxes (earning 9.1% of the income), the top 1% with gross income of $328,049 or more pay 36.9% (earning 19%), the top 5% with gross income of $137,056 or more pay 57.1% (earning 33.4%), and the bottom 50% with gross income of $30,122 or less pay 3.3% (earning 13.4%).[9][10] If the federal taxation rate is compared with the wealth distribution rate, the net wealth (not only income but also including real estate, cars, house, stocks, etc) distribution of the United States does almost coincide with the share of income tax - the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (wealth 57.2%), top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%).[11] Graphical representation of the Gini coefficient The Gini coefficient is a measure of inequality of income distribution or inequality of wealth distribution. ... Differences in national income equality around the world as measured by the national Gini coefficient. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        IRS redirects here. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... First discussed by the Physiocrats in France, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. ... In economics, Distribution of wealth refers to the proportion of capital controlled by a given percentage of a population. ...


Other taxes in the United States with a less progressive structure or a regressive structure, and legal tax avoidance loopholes change the overall tax burden distribution. For example, the payroll tax system (FICA), a 12.4% Social Security tax on wages up to $97,500 and a 2.9% Medicare tax (a 15.3% total tax that is often split between employee and employer) is a regressive tax on income with no standard deduction or personal exemptions. The Center on Budget and Policy Priorities states that three-fourths of U.S. taxpayers pay more in payroll taxes than they do in income taxes.[12] The Tax Foundation has stated that the burden of the corporate income tax (a 15-39% tax) falls on customers and workers of the corporations, who are often not rich.[13] This article contrasts tax evasion, tax avoidance and tax mitigation. ... For other uses, see FICA (disambiguation). ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A regressive tax is a tax imposed so that the tax... The Center on Budget and Policy Priorities (CBPP) describes itself as a policy organization . ... The Tax Foundation logo The Tax Foundation is a Washington-D.C.-based tax research organization founded in 1937. ...        Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. ...


Inflation and tax brackets

Most tax laws are not accurately indexed to inflation. Either they ignore inflation completely, or they are indexed to the Consumer Price Index (CPI), which tends to understate real inflation.[14] In a progressive tax system, failure to index the brackets to inflation will eventually result in effective tax increases (if inflation is sustained), as inflation in wages will increase individual income and move individuals into higher tax brackets with higher percentage rate. One example is the Alternative Minimum Tax; since it is not indexed to inflation,[15][16] an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax. CPI-U 1913-2004; Source: U.S. Department Of Labor The U.S. Consumer Price Index is a time series measure of the price level of consumer goods and services. ...        Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ...


Tax withholding

Federal payroll taxes in the United States are primarily collected by employers on behalf of the Internal Revenue Service (IRS). The Federal income tax uses a system of direct withholding. Employers deduct part of a taxpayer's income directly from their payroll checks. Self-employed individuals make similar payments to the government. The amount of withholding is calculated based on an employee's expected annual salary and the employee's living situation (married or unmarried, number of dependents, other factors). Withholding does not perfectly calculate an individual's tax each year. The difference between the amount withheld and the actual tax is either paid to the government after the end of the year, or refunded by the government. Withholding is done on an honor system with penalties imposed on individuals who do not have enough withheld (or make enough estimated tax payments) during the year. The amounts deducted can be found in IRS Publication 15, also referred to as Circular E. For farmers, the rules are outlined in Publication 51 (Circular A). The IRS's Publication 505 can also be used to estimate the amount of tax withheld. In the United States income tax system, employers are required to withhold a portion of each employees income and pay it directly to the U.S. Internal Revenue Service. ... Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        IRS redirects here. ... In the United States income tax system, employers are required to withhold a portion of each employees income and pay it directly to the U.S. Internal Revenue Service. ...


Some individuals choose to withhold more of their estimated tax burden than necessary, using the withholding and the refund check at the end of the year as a way of "forced savings" (at zero percent interest). Conversely, other individuals withhold as little as possible, using the rule that withholding need only be 100% of the previous year's tax liability, and thus pay a large amount on April 15. Most individuals fall somewhere in the middle. For other senses of this word, see interest (disambiguation). ...


Federal income tax

As of June 2001, the income tax forms the bulk of taxes collected by the U.S. government.[citation needed] Depending on individual income, the tax ranges from zero to 35% of one's taxable income. FairTax Flat tax Tax protester arguments Constitutional Statutory Conspiracy Taxation by country Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        The federal government of the United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents estates... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        An income tax is a tax levied on the financial income... As commonly used, individual refers to a person or to any specific object in a collection. ... Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. ...


The income tax is considered a progressive tax because the tax rate is higher as a percentage of the income for higher-income individuals. For an example showing the tax rates imposed by Congress in 1954 on the taxable income of unmarried individuals—with rates as high as 91%—see the chart at Internal Revenue Code of 1954. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective... The United States Internal Revenue Code of 1954 temporarily extended the 5 percentage point increase in corporate tax rates through March 31, 1955, increased depreciation deductions by providing additional depreciation schedules, and created a 4 percent dividend tax credit for individuals. ...


Income tax is also imposed on the taxable income of most corporations and again on dividends paid to stockholders, although individuals usually pay a preferential tax rate on dividends; this is sometimes referred to as double taxation. For other uses, see Corporation (disambiguation). ... A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. ... Double taxation is a situation in which two or more taxes may need to be paid for the same asset, financial transaction and/or income and arises due to overlap between different countries tax laws and jurisdictions. ...


One fairly unique aspect of federal income tax in the United States, is that the U.S. uses citizenship in addition to residency in determining whether a person's income is subject to U.S. taxation. All U.S. citizens, including those who do not live in the United States, are subject to U.S. income tax on their worldwide income. There are provisions that exist to reduce double-taxation. Most other countries do not impose tax on their citizens who are not resident within their borders, unless they have income which is sourced in that country (and even then they only tax that specific income).[citation needed] Citizen redirects here. ...


Tax deductions/credits

The U.S. government rewards certain behavior with tax deductions or tax credits. For example, amounts used to pay mortgage interest on a personal home may be deductible, if the taxpayer elects to itemize. Taxpayers who do not participate in an employer-sponsored pension plan may contribute up to $4,000 ($5,000 if age 50 or above) into an individual retirement account, and deduct that contribution from their gross income if they fall within certain income limits. The Earned Income Tax Credit benefits low- to moderate-income working families. It is also possible to receive a child and dependent care credit for amounts spent on daycare. A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. ... Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is an item which is treated as a payment already made towards taxes owed. ... This article is about the legal mechanism used to secure property in favor of a creditor. ... For other senses of this word, see interest (disambiguation). ... Individual taxpayers in the United States are faced with a choice when preparing their tax returns. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        An Individual Retirement Account (or IRA) is a retirement plan account that provides some tax advantages for retirement savings in the United States. ... The United States federal Earned Income Tax Credit (EITC) is a refundable tax credit that reduces or eliminates the taxes that low-income married or single working people pay (such as payroll taxes) and also frequently operates as a wage subsidy for low-income workers. ...


Methods of calculation

Chart showing how the United States Congress spends the federal tax revenue. –31 January 2008
Chart showing how the United States Congress spends the federal tax revenue.[17] 31 January 2008

There are two required ways to calculate the U.S. income tax. The "regular tax" is based on the gross income minus any applicable deductions and then a marginal tax percentage is applied according to the taxpayer's income bracket. From this result, any applicable tax credits are subtracted and the result is the income tax owed. If the result is a negative number due to refundable tax credits and/or if the Federal Withholding Tax was greater than the income tax that was actually owed, the taxpayer is entitled to a tax refund. A taxpayer eligible for a refundable credit (such as the earned income tax credit) may receive a refund even without paying any federal income tax. Type Bicameral Houses Senate House of Representatives President of the Senate President pro tempore Dick Cheney, (R) since January 20, 2001 Robert C. Byrd, (D) since January 4, 2007 Speaker of the House Nancy Pelosi, (D) since January 4, 2007 Members 535 plus 4 Delegates and 1 Resident Commissioner Political... Refundable tax credit refers to the concept of giving tax refunds to individuals in excess of the amount of tax actually paid. ... In the United States, taxpayers will get a tax refund, a refund on their U.S. income tax, if the tax they owe is less than the sum of: The total amount of refundable tax credits that they claim. ...


The second way, the "Alternative Minimum Tax" (AMT) is based on the gross income, computed without regard to certain tax preference items (such as tax-exempt interest on certain private activity bonds) and with a reduced number of exemptions and deductions. This higher income base is taxed in two rate brackets, 26% and 28%, depending on taxpayer income. The taxpayer pays the higher of the two computed tax liabilities.        Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ...


In the tax year 2000, many taxpayers in Silicon Valley were caught unprepared by the AMT due to the sudden decline in technology stock prices. Under AMT rules, unrealized gains on incentive stock options (ISOs) are taxed at the date the options are exercised. In contrast, under the regular tax rules capital gains taxes are not paid until the actual shares of stock are sold. For example, if someone exercised a 10,000 share Nortel stock option at $7 when the stock price was at $87, the bargain element was $80 per share or $800,000. Without selling the stock, the stock price dropped to $7. Although the real gain is $0, the $800,000 bargain element still becomes an AMT adjustment, and the taxpayer owes thousands of dollars in AMT. For the Nintendo 64 game, see Space Station Silicon Valley. ...


The AMT was designed to prevent people from using loopholes in the tax law to avoid tax. However, the inclusion of unrealized gain on incentive stock options imposes difficulties for people who cannot come up with cash to pay tax on gains that they have not realized yet. As a result, Congress has taken action to modify the AMT regarding incentive stock options. In 2000 and 2001, people exercised incentive stock options and held onto the shares, hoping to pay long-term capital gains taxes instead of short-term capital gains taxes.[18] Many of these people were forced to pay the AMT on this income, and by the end of the year, the stock was no longer worth the amount of AMT tax owed, forcing some individuals into bankruptcy. In the Nortel example given above, the individual would receive a credit for the AMT paid when the individual did eventually sell the Nortel shares.


Another perceived flaw in the AMT is that it hasn't been changed at the same rate as regular income taxes. The tax cut passed in 2001 lowered regular tax rates, but did not lower AMT tax rates. As a result, certain middle-class people are affected by the AMT, even though that was not the original intent of the law. People with large deductions, particularly mortgage interest and state income tax deductions, are affected the most. The AMT also has the potential to tax families with large numbers of dependents (usually children), although in recent years, Congress has acted to keep deductions for dependents, especially children, from triggering the AMT.


A further criticism is that the AMT does not even affect its intended target. Congress introduced the AMT after it was discovered that 21 millionaires did not pay any US income tax in 1969 as a result of various deductions taken on their income tax return. Since the marginal rate of persons with one million dollars of income is 35% and the AMT uses a 26% rate on all income, it is unlikely that millionaires would get tripped by the AMT as their effective tax rates are already higher. Those that do get caught by the AMT are typically upper-middle class persons making approximately $200k-$500k.


Statistics from the U.S. Internal Revenue Service (IRS) for 2000 show that returns showing less than $15,000 in adjusted gross income amounted to 30% of total returns filed but accounted for less than 1% of tax paid. By contrast, although they made up only 2% of all taxpayers that year, taxpayers reporting $200,000 or more in adjusted gross income paid 45% of all federal income taxes. (See: Lucky duckies) Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        IRS redirects here. ... Lucky Duckies is a term that was used in Wall Street Journal editorials starting on 20 November 2002 to refer to Americans who pay no federal income tax because they are at an income that is below the tax line (after deductions and credits). ...


Progressive nature

In general, the U.S. income tax is progressive, at least with respect to individuals that earn wage income. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A progressive tax is a tax imposed so that the effective...


"Progressivity" as it pertains to tax is usually defined as meaning that the higher a person's level of income, the higher a tax rate that person pays. In the mid-twentieth century, tax rates in the United States and United Kingdom exceeded 90%. As recently as the late 1970s, the top tax rate in the U.S. was 70%. Despite the dramatic fall in the marginal tax-rate of the top-income brackets from the 1960s to the 2000s, taxes on wages, interest, and dividends have become more progressive over the past fifty years.[19]


Progressivity in income tax is accomplished mainly by establishing tax "brackets" - tranches of income that are taxed at progressively higher rates. For example, for tax year 2006 an unmarried person with no dependents will pay 10% tax on the first $7,550 of taxable income. The next $23,100 (i.e. taxable income over $7,550, up to $30,650) is taxed at 15%. The next $43,550 of income is taxed at 25%. Additional brackets of 28%, 33%, and 35% apply to higher levels of income. So, if a person has $50,000 of taxable income, his next dollar of income earned will be taxed at 25% - this is referred to as "being in the 25% tax bracket," or more formally as having a marginal rate of 25%. However, the tax on $50,000 of taxable income figures to $9,058. This being 18% of $50,000, the taxpayer is referred to as having an effective tax rate of 18%.


In recent years, a reduction in the tax rates applicable to capital gains and received dividends payments, has significantly reduced the tax burden on income generated from savings and investing. An argument is often made that these types of income are not generally received by low-income taxpayers, and so this sort of "tax break" is anti-progressive. Further clouding the issue of progressivity is that far more deductions and tax credits are available to higher-income taxpayers. A taxpayer with $40,000 of wage income may only have the "standard" deductions available to him, whereas a taxpayer with $200,000 of wage income might easily have $50,000 or more of "itemized" deductions. Allowable itemized deductions include payments to doctors, premiums for medical insurance, prescription drugs and insulin expenses, state taxes paid, property taxes, and charitable contributions. In those two scenarios, assuming no other income, the tax calculations would be as follows for a single taxpayer with no dependents in 2006: In finance, a capital gain is profit that results from the appreciation of a capital asset over its purchase price. ... A dividend is the distribution of profits to a companys shareholders. ...

Wage income $40,000 $200,000
Allowable deductions 8,450 51,430
Taxable income 31,550 148,570
Income tax 4,445 46,725
Effective rate 14% 31%

This would appear to be highly progressive - the person with the higher taxable income pays tax at twice the rate. But this does not give the complete picture. If you divide the tax by the amount of gross income (i.e. before deductions), the effective rates are 11% and 23%: the higher income person's rate is still twice as high, but his deductions drive down the effective rate to a much greater degree. In addition, most discussions of income tax progressivity do not take into account the social security tax, which has a "ceiling". To expand the above example:

Social security tax $3,060 $8,740
Total tax 7,505 55,465
Rate paid on gross income 19% 28%

Progressivity, then is a complex topic which does not lend itself to simple analyses. Given the "flattening" of tax burden that occured in the early 1980's, many commentators note that the general structure of the U.S. tax system has begun to resemble a partial consumption tax regime.[20] A consumption tax is a tax on the purchase of a good or service. ...


In 2001 the top 1% earned 14.8% of all income and paid 22.7% of all federal taxes. The next 4% earned 12.7% and paid 15.8%. The next 5% earned 10.1% and paid 11.5%. The next 10% earned 14.8% and paid 15.3%, completing the highest quintile. The fourth quintile earned 20.7% of all income and paid 18.5%. The third quintile earned 14.2% and paid 10%. The second quintile earned 9.2% and paid 4.9%. The lowest quintile earned 4.2% and paid 1% of all federal taxes.[21] Whether this breakdown is "fair" is a matter of some debate.


Payroll taxes

Social Security tax

The next largest tax is Social Security tax formally known as the Federal Insurance and Contributions Act (FICA). This contribution or tax is 6.2% of an employees' income paid by the employer, and 6.2% paid by the employee. This tax is paid only on earned income and, as noted above, only up a threshold income for calendar year 2006 of $94,200 called the "Social Security Wage Base" (SSWB). The SSWB increases every year *[22] table of SSWB by year] according to the national index average of wages *[23] which also indexes the bend points in the Primary Insurance Amount (PIA) computations. (As of 2008 the SSWB was set at $102,000.) Unearned income like interest from bonds, money market and bank accounts, dividends from REITs and common stocks, rents, and royalties are not subject to the Social Security tax. Wages are defined in the United States Code 42 USC Section 409.[24] Thus, by simple arithmetic higher earners pay a lower average tax rate than those with earned income at the upper end. Self-employed people must pay both halves of the Social Security tax because they are their own employers. For other uses, see FICA (disambiguation). ... Taxes redirects here. ... Social Security, in the United States, currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... For the OSADI or Social Security system, the SSWB or the Social Security Wage Base is the maximum earned income or upper threshold on which a wage earners FICA or Social Security tax may be based. ...


Medicare tax

The Medicare tax funds the Medicare program, a health insurance program for the elderly and disabled. 1.45% of the employee's income is paid by the employer as Medicare tax, and 1.45% is paid by the employee. Unlike Social Security, there is no cap on the Medicare tax. For other uses, see FICA (disambiguation). ... President Johnson signing the Medicare amendment. ...


For Self-Employeed people, Medicare taxes are fixed at 2.9% on all earnings (can be offset by income tax provisions.)


As in FICA, unearned income is not subject to the Medicare contribution.


Together, Social Security and Medicare taxes compose the payroll tax. These taxes are based on income, but unlike the Federal income tax, they are set aside for their specific purposes. That is, there is a statutory requirement that expenditures on these programs Medicare and Social Security come out of current taxes or accumulated trust funds, so if they go broke, the Social Security Administration and Medicare would be without the authority to pay benefits. Unlike Congress, they cannot borrow on the federal government's creditworthiness to fund operations from the credit markets.


Other payroll taxes

The U.S. has a payroll tax to support unemployment insurance. This is 1.2% of the first $7,000, but coordinated with state unemployment agencies and taxes in such a way that most employees are not double taxed in states that have unemployment insurance. The U.S. also has a tax to pay for retraining of displaced workers, but it is only 0.1% of the first $7,000 of income, and it is assessed only on employers. The government tracks tax payment by an account number and payment date. For the IRS, the account number is a Social Security Number, Individual Taxpayer Identification Number, or Employer Identification Number. The promotional Social Security card as distributed by the F.W. Woolworth Company In the United States, a Social Security number (SSN) is a 9-digit number issued to citizens, permanent residents, and temporary (working) residents under section 205(c)(2) of the Social Security Act, codified as . ... An Individual Taxpayer Identification Number (or ITIN) is a United States tax processing number issued by the Internal Revenue Service. ... Applicable to the United States, an Employer Identification Number or EIN is the corporate equivalent to a Social Security Number, although it is issued to anyone, including individuals, who have to pay withholding taxes on employees. ...


Corporate income tax

In the United States, the federal corporate income rate for the year 2006 varies between 15 and 39% depending on taxable income. But since 1999, when Treasury announced the "check the box" system many corporations can elect to be treated as a pass-through entity, thereby skipping the entity level 35% tax and having all income pass through to the shareholders. This is the tax treatment that the much discussed "S" corporations receive; but now many more types of state-law corporations may avoid double taxation by "checking the box". Dividends are also subject to a lower rate of income tax in the United States. The U.S. corporate tax rate is ranked as the second highest statutory rate among the OECD countries (the U.S. average rate of 39.3 ranks just behind Japan's 39.5 and well above the OECD average of 28.7).[25] However, the U.S also has the greatest number of corporate tax loopholes of any OECD member,[26] allowing many corporations to achieve a lower effective tax rate than the published rates.        Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. ... An S corporation or S-corp, for US federal tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. ... In a tax system and in economics, the tax rate describes the burden ratio (usually expressed as a percentage) at which a business or person is taxed. ... The Organisation for Economic Co-operation and Development (OECD), (in French: Organisation de coopération et de développement économiques; OCDE) is an international organisation of thirty countries that accept the principles of representative democracy and a free market economy. ... Look up loophole in Wiktionary, the free dictionary. ...


Transfer taxes

The transfer tax is targeted at wealthy individuals and families and generates less than 2% ($30 billion) of the federal government's annual revenue ($2 trillion). It consists of the gift tax, the estate tax and the generation-skipping transfer tax ("GSTT"). Opponents of the transfer tax label these taxes "death taxes". The term "death tax" was popularized by Frank Luntz, a Republican political consultant, but its use goes back to at least the 19th century.[27] A transfer tax is a direct tax that is paid when title to property is transferred. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... The U.S. Generation-Skipping Transfer Tax imposes a tax on both outright gifts and transfers in trust to or for the benefit of persons two or more generations younger than the donor, such as grandchildren. ... The term death tax in the United States is a reference by opponents of the estate tax to the fact that a death must occur prior to a tax on the value of a deceased individuals assets is assessed. ... Frank I. Luntz (born February 23, 1962) is a corporate and political consultant and pollster who has worked most notably with the Republican Party in the United States. ...


The gift tax is a tax levied on wealth transfers during the transferor's life while the estate tax is levied on transfers made after the transferor's death. The GSTT is a tax in addition to the gift and estate tax and is levied (in rough terms) on transfers made during life or after death to individuals removed by more than one generation from the transferor, for example, from a grandmother to a grandson. Usually transfer tax liabilities are paid by the transferor or the transferor's estate. Payment of transfer taxes by the transferor when the liability is due from the recipient is also a taxable gift. At common law, an estate is the totality of the legal rights, interests, entitlements and obligations attaching to property. ...


As of December 2002, tax rates for gift and estate taxes begin at 18% and rise to 50% for gifts or taxable estates over $2.5 million under the Unified Transfer Tax Rate Schedule. The GSTT is a flat 50%. Each individual is granted a Unified Credit (currently $345,800) the effect of which exempts estates under $1 million. Each individual is also granted an annual exclusion amount the effect of which exempts total gifts to any one individual during the year up to the annual exclusion amount (currently $11,000). If the transferor does not elect to pay the gift tax on the value of gifts totaling more than the annual exclusion amount, the individual is deemed to have used a portion of his Unified Credit. An exemption (currently $1.1 million) for transfers subject to the GSTT is also granted to each individual during his lifetime. The Unlimited Marital Deduction allows (non-foreign) spouses to transfer any amount of wealth with no transfer tax consequences. 2002 is a common year starting on Tuesday of the Gregorian calendar. ...


Excise taxes

The U.S. also maintains federal excise taxes on gasoline and other fuels used by vehicles. At this time (2005) they are 18.4¢ per gallon (4.9¢/l) for gasoline and 24.4¢ per gallon (6.4¢/l) for diesel (for highway use). Higher profile excise taxes exist on distilled spirits, tobacco products, and some firearms.        Look up Excise tax in the United States in Wiktionary, the free dictionary. ... This article is about the fuel. ...


State and local government taxation

U.S. states are recognized as having a plenary power to assess taxes on their citizens and on activities that occur within their borders, so long as those taxes do not infringe on a power reserved for the federal government. The Supreme Court has found, in various cases, that states cannot impose taxes designed to impede interstate commerce or influence international relations. States are also prohibited from assessing taxes in ways that discriminate on the basis of race, gender, religion, alienage, or nationality. Finally, states may not condition the right to vote on payment of taxes. The Twenty-fourth Amendment to the United States Constitution, ratified in 1964, specifically prohibits such a condition in Federal elections; the Supreme Court ruled in Harper v. Virginia Board of Elections that the Equal Protection Clause of the Fourteenth Amendment does the same in state elections. Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      A U.S. state is any one of the fifty subnational entities of... A plenary power or plenary authority is the complete power of a governing body. ... Amendment XXIV in the National Archives Amendment XXIV (the Twenty-fourth Amendment) of the United States Constitution prohibits both Congress and the states from conditioning the right to vote in federal elections on payment of a poll tax or other types of tax. ... The Supreme Court Building, Washington, D.C. The Supreme Court Building, Washington, D.C., (large image) The Supreme Court of the United States, located in Washington, D.C., is the highest court (see supreme court) in the United States; that is, it has ultimate judicial authority within the United States... In Harper v. ... Congressman John Bingham of Ohio was the principal framer of the Equal Protection Clause. ... Amendment XIV in the National Archives The Fourteenth Amendment to the United States Constitution (Amendment XIV) is one of the post-Civil War amendments (known as the Reconstruction Amendments), first intended to secure rights for former slaves. ...


Local government is now typically financed by value-based property taxes, mainly on real estate. Additional taxes may be in the form of fixed sales taxes and use taxes. Local government fees such as building permit fees may reflect the added capital cost and operating costs of services such as schools and parks. Local governments may also collect fines (parking and traffic tickets), income tax, gross receipts or gross payroll tax, or a portion of sales taxes (such as meal taxes) collected by the state. In California, seeds, bulbs, starter plants and trees obtained from a garden center are taxed if adjudged for decorative purposes while plants for food production are untaxed, as is food in California. Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... A sales tax is a consumption tax charged at the point of purchase for certain goods and services. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        A use tax is a type of excise tax levied in the United States. ... A Construction permit is a permit needed in many jurisdictions for new construction, or adding onto pre-existing structures. ... This is the amount on which you first claim CCA. The capital cost of a depreciable property is usually the total of the purchase price, not including the cost of land (which is not depreciable);the part of your legal, accounting, engineering, installation, and other fees that relates to the... This article is about the U.S. state. ...


Almost every state imposes "sin taxes" on products frowned upon by the community, including cigarettes and liquor. Many states also impose a gas tax. The power of the state to tax encompasses the ability to empower jurisdictions within the state such as counties, cities and school districts to impose taxes on their residents. These jurisdictions may impose any of the kinds of taxes that the state may, within the boundaries established by state law. A Sin tax is a euphemism for a tax specifically levied on certain generally socially-proscribed goods - usually alcohol and tobacco. ... Unlit filtered cigarettes. ... Spirits redirects here. ... A gasoline tax (also known as a gas tax, petrol tax, fuel tax or fuel duty) is a sales tax imposed on the sale of gasoline. ...


Income, sales, and property

Each state also has its own tax system. State tax levels indicate both the tax burden and the services a state can afford to provide residents. ... States with no state income tax are in red, states taxing only dividend and interest income are in yellow Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        State income tax is an income tax in the United States that is levied by each... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        A sales tax is a tax on consumption and is normally a certain percentage that is added onto the price of goods or services that are purchased. ...


Typically there is a tax on real estate, usually called "property taxes". Real estate taxes are often imposed on the value of real estate by reason of its ownership. For example, in Texas the real estate tax is imposed on the real estate and in particular on the owner of the real estate as of January 1 of each tax year. The tax is computed by applying a tax rate to the appraised value of the real estate as of the tax date. Some states like New York also have a real estate transfer tax. Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ...


There may be additional income taxes, sales taxes, and excise taxes (including use taxes). Taxable income for state purposes is usually based on federal taxable income with certain state specific adjustments. For example, some states tax municipal bond interest derived from other states that are otherwise exempt from federal income tax. Thus, this income must be added to the federal taxable income to compute the income amount for state income tax purposes. Oil and mineral producing states often impose a severance tax, similar to an excise tax in that tax is paid on the production of products, rather than on sales. Similarly, most New England states have yield taxes on timber/firewood cutting, payable as a percentage of the value cut, not the profit. Taxes on hotel rooms are common, and politically popular because the citizens will often approve such a tax while the taxpayers will come from other areas. A sales tax is a consumption tax charged at the point of purchase for certain goods and services. ... An excise is an indirect tax or duty levied on items within a country. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        A use tax is a type of excise tax levied in the United States. ... Petro redirects here. ... For other uses, see Mineral (disambiguation). ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Ecotax, short for Ecological taxation, can refer to: A fiscal policy... This article is about the region in the United States of America. ...


Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not levy an individual income tax. New Hampshire and Tennessee only tax interest and dividend income. Delaware, Oregon, Montana and New Hampshire have no state or local sales tax. Alaska has no state sales tax, but allows localities to collect their own sales taxes up to a state-specified maximum. For other uses, see Alaska (disambiguation). ... This article is about the U.S. State of Florida. ... This article is about the U.S. State of Nevada. ... Official language(s) English Demonym South Dakotan Capital Pierre Largest city Sioux Falls Area  Ranked 17th in the US  - Total 77,116[1] sq mi (199,905 km²)  - Width 210 miles (340 km)  - Length 380 miles (610 km)  - % water 1. ... For other uses, see Texas (disambiguation). ... For the capital city of the United States, see Washington, D.C.. For other uses, see Washington (disambiguation). ... Official language(s) English Capital Cheyenne Largest city Cheyenne Area  Ranked 10th  - Total 97,818 sq mi (253,348 km²)  - Width 280 miles (450 km)  - Length 360 miles (580 km)  - % water 0. ... For other uses, see New Hampshire (disambiguation). ... This article is about the U.S. state of Tennessee. ... This article is about the U.S. State of Delaware. ... This article is about the U.S. state. ... This article is about the U.S. State. ... For other uses, see New Hampshire (disambiguation). ... For other uses, see Alaska (disambiguation). ...


Many states also levy personal property taxes, which are annual taxes on the privilege of owning or possessing items of personal property within the boundaries of the state. Automobile and boat registration fees are a subset of this tax; however, most people are unaware that practically all personal property is also subject to personal property tax. Usually, household goods are exempt; but virtually all objects of value (including art) are covered, especially when regularly used or stored outside of the taxpayer's household.


States permit the creation of special assessment districts (typically for provision of water or removal of sewage, or for parks, public transit, emergency services or schools) whose boundaries may be independent of other boundaries and whose income may be from one or more of service assessments, property taxes, parcel taxes, a portion of road or bridge tolls, or an additional increment upon sales taxes in addition to the non-tax fees for services provided (such as metered water). State government is financed mainly by a mix of sales and/or income taxes and to a lesser extent by corporate registration fees, certain excise taxes, and automobile license fees.


City and county tax

Cities and counties in the individual states may levy additional taxes, for instance to improve parks or schools, or pay for police, fire departments, local roads, and other services. As in the case of the IRS, they generally require a tax payment account number. Other local governmental agencies may also have the power to tax, notably independent school districts.


Local government taxes are usually property taxes but may also include sales taxes and income taxes. Some cities collect income tax on not only residents but non-residents employed in the city. This tax can even be incurred when a non-resident works temporarily in the city. For example, in 1992 the city of Philadelphia began enforcing the collection of city wage taxes on visiting baseball players who played games in Philadelphia.[28] At least some counties levy an Occupational Privilege Tax (OPT), usually for a small amount, in some cases less than $100/yr. For other uses, see Philadelphia (disambiguation) and Philly. ...


Federal tax reform

"'Revenue Reform' Train Stopped by 'Vested Interests,' 'Local Issues,' 'Trusts,' and other poles" — Political cartoon from 1880–1900 commenting on tax reform.
"'Revenue Reform' Train Stopped by 'Vested Interests,' 'Local Issues,' 'Trusts,' and other poles" — Political cartoon from 18801900 commenting on tax reform.
For more details on this topic, see Tax reform.

The President's Advisory Panel for Federal Tax Reform criticized the tax system as being extremely complex, requiring detailed record-keeping, lengthy instructions, and complicated schedules, worksheets, and forms. They stated that it penalizes work, discourages saving and investment, and hinders the competitiveness of American business. The tax code is commonly riddled with provisions that treat similarly situated taxpayers differently and create perceptions of unfairness.[29] The panel's major reform push was for the removal of the Alternative Minimum Tax, which is not indexed for inflation. Several organizations and individuals are working for tax reform in the United States including Americans for Tax Reform, Citizens for an Alternative Tax System, Americans For Fair Taxation, and Libertarian Party (United States). Various proposals have been put forth for tax simplification in Congress including the FairTax and various Flat tax plans. Proposals have also been put forth to completely abolish the Federal Income Tax for individuals. Image File history File links No higher resolution available. ... Image File history File links No higher resolution available. ... This early political cartoon by Ben Franklin was originally written for the French and Indian War, but was later recycled during the Revolutionary War An editorial cartoon, also known as a political cartoon, is an illustration or comic strip containing a political or social message. ... Year 1880 (MDCCCLXXX) was a leap year starting on Thursday (link will display the full calendar) of the Gregorian calendar (or a leap year starting on Tuesday of the 12-day slower Julian calendar). ... Äž: For the film, see: 1900 (film). ... Tax reform is the process of changing the way taxes are collected or managed by the government. ... On January 7, 2005, President George W. Bush announced the establishment of the Presidents Advisory Panel for Tax Reform, a bipartisan panel to advise on options to reform the United States income tax code to make it simpler, fairer, and more pro-growth to benefit all Americans. ... // This article does not cite any references or sources. ... Invest redirects here. ...        Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ... Americans for Tax Reform is an interest group seeking to reduce the overall level of taxation in the United States, at the federal, state and local level. ... Citizens for an Alternative Tax System (CATS) is a national grassroots public interest group in the United States. ... Americans For Fair Taxation (AFFT) is the nations largest, single-issue grassroots organization dedicated to fundamental tax code replacement. ... The Libertarian Party is a United States political party founded on December 11, 1971. ... Throughout this article, the unqualified term dollar and the $ symbol refer to the United States dollar. ... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion on income), as opposed to a graduated, or progressive, scheme. ...


Tax protester arguments

Various individuals and groups have questioned the legitimacy of United States federal income tax. One such group argues that the 16th Amendment to the United States Constitution was not approved by the requisite number of States,[30] and therefore never came into effect. The argument that the Sixteenth Amendment was "never ratified" has been rejected by the Internal Revenue Service and by the courts and ruled to be a frivolous argument.[31][32][33] Many other arguments have been raised by taxpayers and uniformly rejected by the courts. Tax protester arguments are a number of theories that deny that a person has a legal obligation to pay a tax for which the government has determined that person is liable. ... Amendment XVI in the National Archives The Sixteenth Amendment (Amendment XVI) of the United States Constitution was ratified on February 3, 1913. ... Wikisource has original text related to this article: The United States Constitution The United States Constitution is the supreme law of the United States of America. ...


List of taxes

Taxes and fees imposed by federal, state or local laws.

       Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ... This article is about Capital gains tax in the United States. ... Corporate tax refers to direct taxes charged by various jurisdictions on the profits made by companies or associations. ... This article is about Estate tax in the United States. ...        Look up Excise tax in the United States in Wiktionary, the free dictionary. ... Unlit filtered cigarettes. ... Booze redirects here. ... FairTax Flat tax Tax protester arguments Constitutional Statutory Conspiracy Taxation by country Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        The federal government of the United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents estates... The Federal Unemployment Tax Act (FUTA) authorizes the Internal Revenue Service to collect a federal employer tax used to fund state workforce agencies. ... For other uses, see FICA (disambiguation). ... Social Security, in the United States, currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... A gasoline tax (also known as a gas tax, petrol tax, fuel tax or fuel duty) is a sales tax imposed on the sale of gasoline. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... IRS penalties, as set out in the Internal Revenue Code, are to enhance voluntary compliance. ... The Scottish Executive plans to bring forward legislation to replace the council tax with a local income tax (LIT), as part of the funding for Scottish local authorities. ... A tax on products not considered essential, such as expensive cars. ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ... Property tax is an ad valorem tax that an owner of real estate or other property pays on the value of the target of the tax. ... A sales tax is a consumption tax charged at the point of purchase for certain goods and services. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        A use tax is a type of excise tax levied in the United States. ... States with no state income tax are in red, states taxing only dividend and interest income are in yellow Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        State income tax is an income tax in the United States that is levied by each... It has been suggested that Tariff in American history be merged into this article or section. ... The federal telephone excise tax is a statutory Federal Excise Tax imposed under the Internal Revenue Code in the United States under 26 U.S.C. Â§ 4251 on amounts paid for certain communications services. ...

See also

Seal of the Internal Revenue Service Tax forms in the United States are used by taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service (IRS). ... A non-profit organization (abbreviated NPO, or non-profit or not-for-profit) is an organization whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes, without concern for monetary profit. ... A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        Tax avoidance is the legal utilization of the tax regime to... This article contrasts tax evasion, tax avoidance, tax resistance and tax mitigation. ... Economic policy Monetary policy Central bank   Money supply Gold standard Fiscal policy Spending   Deficit   Debt Policy-mix Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Regulation Banking Fractional-reserve Full-reserve   Free banking Islamic        Tax policy is the study of the best way to... A tax resister resists or refuses payment of a tax because of opposition to the institution collecting the tax, or to some of that institution’s policies. ... Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities including state and federal governments. ... Because of the broad term wealth, property tax, capital transfer taxes (inheritance tax, gift tax) and capital gains taxes are sometimes referred to as wealth taxes. // Net worth tax Some countrys governments will require declaration of the tax payers balance sheet (assets and liabilities), and from that ask for... The marriage penalty in the United States refers to the higher taxes required from some married couples, where spouses are making approximately the same taxable income, filing one tax return (married filing jointly) than for the same two people filing two separate tax returns (as single, not married filing separately... The United States Department of Justice Tax Division is responsible for the prosecution of both civil and criminal cases arising under the Internal Revenue Code and other tax laws of the United States. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        US State Nonresident withholding Tax is a tax of individuals or entities that do not live within the state. ...

Notes

  1. ^ Burns, Scott (2007-02-21). Your real tax rate: 40%. MSN Money. Retrieved on 2008-03-13.
  2. ^ Friedman, Milton; Friedman, Rose (1980). Free to choose. Harcourt. ISBN 978-0-15-633460-0. 
  3. ^ Hodge, Scott A.; Dubay, Curtis S. (2008-03-27). America Celebrates Tax Freedom Day. Tax Foundation. Retrieved on 2008-03-30.
  4. ^ Tariff Act, Ch. 349, 28 Stat. 509 (Aug. 15, 1894).
  5. ^ Article I, Section 2, Clause 3 (as modified by Section 2 of the Fourteenth Amendment) and Article I, Section 9, Clause 4.
  6. ^ Income tax collection, Internal Revenue Service
  7. ^ See 26 U.S.C. § 164(f).
  8. ^ Vote near in Senate showdown over economy, By Jeanne Sahadi, CNN Money, February 6, 2008
  9. ^ Incomes and Politics, Wall Street Journal, September 02, 2006
  10. ^ IRS Individual Income Tax Returns (XLS), Internal Revenue Service, 1986-2004
  11. ^ Kennickell, Arthur (2003-03). A Rolling Tide: Changes in the Distribution of Wealth in the U.S., 1989-2001. United States Federal Reserve. Retrieved on 2007-09-19.
  12. ^ Kamin, David; Shapiro, Isaac (2004-09-13). Studies Shed New Light on Effects of Administration's Tax Cuts. Center on Budget and Policy Priorities. Retrieved on 2006-07-23.
  13. ^ Who Really Pays the Corporate Income Tax?. Tax Foundation last=Chamberlain (2006-05-04). Retrieved on 2008-02-09.
  14. ^ Waggoner, John. "If you think inflation is on the move, time to protect portfolio" (HTML), USA Today, 2004-11-26. Retrieved on 2008-02-03. 
  15. ^ TPC Tax Topics Archive: The Individual Alternative Minimum Tax (AMT): 11 Key Facts and Projections
  16. ^ Falling Into Alternative Minimum Trouble (washingtonpost.com)
  17. ^ Federal Budget Spending and the National Debt
  18. ^ Stock Options, CNN Money
  19. ^ Piketty T., Saez E. "How Progressive is the US Federal Tax System?" Journal of Economic Perspectives, Vol. 21, No. 1, Winter 2007
  20. ^ Consumption tax, Tax Policy Center
  21. ^ http://www.cbo.gov/ftpdocs/53xx/doc5324/04-02-TaxRates.htm
  22. ^ Contribution and Benefit Base
  23. ^ National Average Wage Index
  24. ^ US CODE: Title 42,409. “Wages” defined
  25. ^ Chamberlain, Andrew (2006-05-05). Corporate Income Tax Rates Around the World. Tax Foundation. Retrieved on 2007-09-13.
  26. ^ Soaring Tax Cut Costs, OMB Watch
  27. ^ A Digest of the Death Duties with numerous examples illustrating their incidence, a copious index, and an appendix of the Customs and Inland Revenue acts, 1880, 1881, 1888, 1889, the Mortmain and Charitable Uses acts, 1888, 1891, and the Intestates' Estates Act Norman, A.W. London: W. Clowes, 1892.
  28. ^ Professional Athletes
  29. ^ America Needs a Better Tax System. The President’s Advisory Panel on Federal Tax Reform (2005-04-13). Retrieved on 2007-01-28.
  30. ^ Give Me Liberty
  31. ^ Frivolous Tax, Internal Revenue Service
  32. ^ United States v. Thomas, 788 F.2d 1250, (7th Cir. 1986), cert. denied, 107 S.Ct. 187 (1986); United States v. Benson, 941 F.2d 598, 91-2 U.S. Tax Cas. (CCH) paragr. 50,437 (7th Cir. 1991); Knoblauch v. Commissioner, 749 F.2d 200, 85-1 U.S. Tax. Cas. (CCH) paragr. 9109 (5th Cir. 1984), cert. denied, 474 U.S. 830 (1985); Ficalora v. Commissioner, 751 F.2d 85, 85-1 U.S. Tax Cas. (CCH) paragr. 9103 (2d Cir. 1984); Sisk v. Commissioner; 791 F.2d 58, 86-1 U.S. Tax Cas. (CCH) paragr. 9433 (6th Cir. 1986); United States v. Sitka, 845 F.2d 43, 88-1 U.S. Tax Cas. (CCH) paragr. 9308 (2d Cir.), cert. denied, 488 U.S. 827 (1988); United States v. Stahl, 792 F.2d 1438, 86-2 U.S. Tax Cas. (CCH) paragr. 9518 (9th Cir. 1986), cert. denied, 107 S. Ct. 888 (1987); United States v. House, 617 F. Supp. 237, 87-2 U.S. Tax Cas. (CCH) paragr. 9562 (W.D. Mich. 1985); Ivey v. United States, 76-2 U.S. Tax Cas. (CCH) paragr. 9682 (E.D. Wisc. 1976).
  33. ^ Brown v. Commissioner; 53 T.C.M. (CCH) 94, T.C. Memo 1987-78, CCH Dec. 43,696(M) (1987); Lysiak v. Commissioner; 816 F.2d 311, 87-1 U.S. Tax Cas. (CCH) paragr. 9296 (7th Cir. 1987); and Miller v. United States, 868 F.2d 236, 89-1 U.S. Tax Cas. (CCH) paragr. 9184 (7th Cir. 1989). For background on how arguments that the tax laws are unconstitutional may help the prosecution prove willfulness in tax evasion cases, see the United States Supreme Court decision in Cheek v. United States, 498 U.S. 192 (1991) (defendant arguing about constitutionality may be evidence that the defendant was aware of the tax law, and is not a defense to a charge of willfulness).

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  Results from FactBites:
 
Taxation in the United States - Encyclopedia of Earth (3925 words)
Taxation is an important, but commonly neglected, topic for students of economics, political science, and other social sciences.
Taxation provides a means to redistribute economic resources towards those with low incomes or special needs.
The standard deduction is a fixed amount excluded from taxation in 2003 the standard deduction was $4,750 for single individuals and $9,500 for married couples.
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