Tax system of USA is set up on both federal and state level. US government has levied several types of taxes including taxes on income, capital gains etc. Federal and state government taxes are completely separate and each has its own authority to charge taxes.
However, the federal government does not have the right to interfere with the state taxation. The government of USA imposes oodles of taxes to help in financing its operations. Excise tax, sales tax, corporate income tax, capital gains tax and income tax are the major tax brackets within which the US citizens and the expats are taxed.
USA has a progressive tax mechanism, that means if an individual move up the pay scale and also move up the tax scale. US government believes in levying taxes for carrying out its operations smoothly
Recently on electoral candidate quoted; “If you elect me, your taxes are gonna be raised, not cut”. For the candidate has criticized tax cuts as giving too many benefits to the wealthy and to corporations. The candidate was referring to the individuals who benefitted from the tax and jobs act, not USA tax payers as a whole.
Earlier American citizens enjoyed very few taxes.
But as the time went on, more levies were added- federal income tax, corporate tax, estate tax and many more. Some of the taxes were increased while others were repeated, just to be added again.
The Civil war in US led to the creation of the country’s first income tax and the first version of office of commissioner of Internal Revenue- IRS. The office was responsible for handling the matters of tax and was also responsible for collecting taxes from the individual states.
Other taxes like the estate tax, gift tax and sales tax were slowly added and become part and parcel of the tax regime of USA. The rates of taxes in America often change and the rates of the tax were the same for every citizen, whether they are single, married or heads of households.
The multilayered income tax system is the tax imposed by the federal, state and sometimes local governments. Federal taxes are the progressive ones, higher the income the higher rates of the tax.
US government also levies tax on expat, the citizens who are working and earning in another country. Probably USA is among those few countries; that imposes taxes on all its citizens including the ones who do not live in the country.
A government official quoted; “Yes, taxes in USA are complicated; for two reasons- we do a great deal of social policy through tax expenditures and we tax households rather than individuals. We use the income tax codes to encourage and discourage a lot of different social and economic behaviors.
Even after complications of US tax system, Americans are proud to pay their taxes. To do this, they select a tax service near me. For example, if you live in Cumberland RI and search for "Tax Service Near Me" on Google, you can find Ez Tax Works, which offers tax services. The reasons behind is that the government unlike in many other countries make people administer their own benefits through tax code. For e.g. one involves the cost of raising children, where the eligible households with children receive subsidies as well like child credit, the child care tax credit, the earned income tax credit but only if they fill out their tax return in time and in correct manner. This is the one of the major reasons that majority citizens of America use paid tax preparation services to fill out their tax return in time and avoid unwanted penalties.
Most of the Americans are in fact bothered about the complexity of the tax system instead of the amount they pay out for the tax. Too much of a complicated tax code makes most of the citizens to hire professional tax consultants to guide them through their tax formalities.
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