US tax system: structure, characteristics and features

The US tax system is currently one of the most advanced in the world. Due to fees levied on the most economically active sectors of society, the bulk of the federal budget is provided. America's tax system best reflects a capitalist approach to tax collection. Due to the variety of types and levels of the latter, as well as a variety of benefits and discounts for unprotected layers of society, the US National Assembly allows to correctly distribute the burden on the population and replenish the treasury in a timely manner. You can learn more about how taxes are paid in the USA and what types of payments exist from this article.

A brief excursion into history

Taxes are the main lever by which the state influences the market economy. Taxes account for 90% of all budget revenues received by the state, so this powerful tool should not be underestimated. In the United States, which is a federal state, a three-level tax system is used. But she appeared, of course, far from immediately.

Even Benjamin Franklin, one of the founders of the Declaration of Independence, said: "Two things cannot be avoided in life: death and taxes." In the 19th century, the state budget was formed from revenues from the sale of state lands and customs duties. Such a system did not fill the country's treasury very efficiently; therefore, several large tax reforms were carried out in the 20th century. During this period, priority in the economic policy of the state was given alternately to weakening tax obligations in order to stimulate the market system, or increasing tax revenues to eliminate the budget deficit. In the 60s, J. Kennedy lowered tax rates in order to increase tax revenues in the long run. But this measure had only a temporary effect: after a couple of years, the economy again stopped growing, and military operations in Vietnam led to significant financial instability.

In 1968, the US Congress slightly reduced income tax, and this brought positive results. The financial situation has again become stable. During the reign of R. Reagan, several tax laws were passed. In 1981 and 1986, the income tax rate was again reduced. Nevertheless, the burden on citizens at that time remained quite high, but at the same time, the effectiveness of social insurance increased. Nevertheless, the Reagan administration was not able to completely eliminate the budget deficit, so George W. Bush had to raise the income tax. As a result of the long journey, the US tax system has finally come to some degree of balance. By increasing taxes on corporations and introducing a system of tax incentives for the poor, America has managed to achieve a model in which the economy is actively developing and the budget remains full.

US tax system structure

Currently, taxes in the United States are levied at three levels. In the National Assembly of America, all types of taxes are used in parallel. As a result, one person can pay several types of income tax and several types of property tax (for example, at local and federal levels). Federal taxes, state taxes and local taxes have their own characteristics and principles. Let's consider them in more detail.

1. Federal taxes form the basis of the US budget. They are the most significant part of all the collections of America. At the federal level, income tax, corporate and inheritance tax, customs duties, excise taxes and social security tax are levied. Federal is calculated on a progressive scale. The first $ 5,800 is not subject to income tax, which allows the population to gradually increase their income without being distracted by substantial deductions. If you get more than this amount, income tax can range from 10 to 35%. The logic is simple: the more money you receive, the more you must give to the state. However, there are many exceptions to this system: for example, if you have a mortgage property and / or a student loan, you can get a substantial tax deduction.
2. State taxes are the second link in the National Assembly of America. The state tax service has full independence in fiscal policy matters and can independently regulate fees on its territory. Due to these revenues, the states ensure their development. Taxes on the population make up 80% of the total budget, and the rest is provided by grants from the state. The most popular states of America with a high level of quality of life have rather high tax payments at this level. The first place is occupied by taxes received from sales. The second most important is income tax, followed by corporate income tax.
3. Municipal taxes in the United States occupy a separate level in the National Assembly. Due to these payments, cities add up their budget. However, unlike state taxes, local taxes make up only a small part of the city budget. Most of them get through subsidies and grants. Even the capital of America - Washington - cannot independently cover all its expenses. The priority tax for local fees is property tax. Its rate ranges from 1 to 3%.
   

Naturally, such a huge financial layer should be organized by someone. These payments are controlled by the US Department of the Treasury, or rather, the Internal Revenue Service. Tax evasion in America is a pretty serious crime for which you can spend many years in prison.

Tax principles

The US tax system is not in vain considered the most developed and complex in the world. It is based on numerous principles that are invariably observed in the development of new laws and the formation of tax payments.

• The fair tax principle guarantees all residents of the United States equal rights. Everyone is charged taxes as they become viable. A poor person in America will never pay as much as a business owner.
• The prevalence of direct taxes over indirect ones. US residents are always aware of what charges will await them next month. Direct taxes account for 70% of all tax revenue.
• The principle of equality of privileges and immunities speaks of the equality before taxes of the states of all citizens, regardless of place of birth.
• The principle of tax immunity for goods and services that participate in interstate commerce. This rule has been confirmed by a number of court decisions. In practice, it looks like this: if you buy milk in Texas and take it to California, then the last state does not have the right to tax goods imported into its territory.
• The rule of law. All taxes imposed in the United States may be established, canceled, or changed only in accordance with laws prescribed in the Constitution.
• The principle of parallelism of taxes. Each US citizen pays several options for the same tax. For example, income is charged at the federal, local, and state levels. And up to five types of excise taxes can be extended to some types of fuel: federal, state, adjacent universal and specific.
• The principle of publicity: everyone in America can find out exactly what his taxes went to. The funds taken by the state can be used solely for the purpose of paying off the country's debts, replenishing the state budget, providing defense and other actions aimed at the welfare of the United States.

Types of taxes

US taxes, federal taxes, and local taxes can be divided into several types.

1. Personal income tax is the main source of replenishment of the treasury of the United States. It is levied on personal incomes of the population, and its percentage depends on the profit a person receives.
2. Payroll taxes are sent for social insurance needs. They provide an opportunity to receive pensions and payments in case of injuries, disabilities and other disabilities. As in Russia, the final pension depends on the length of service and salary of the employee, as well as on state policy. The minimum possible contribution is 25-30%. Due to the high level of injuries at work, the states have related programs that help pay disabled citizens.
3. Income tax in the United States applies to corporations and companies that are registered as legal entities. The net profit of the enterprise is subject to taxation. This tax is progressive, which means it increases as the income of the enterprise increases. Such a system provides scope for the development of small and medium-sized businesses.
4. Property taxes in the United States imply a levy of securities, real estate, and houses for rent in the amount of 1.5-3%.
5. Fuel tax is included in the price of gasoline.
6. The tax on food and goods is the most obvious for any person who came to the United States. It is established by regular self-government bodies. For example, in Pennsylvania, it is 6%. Absolutely all products on store shelves are sold at no extra charge, and the total amount you can see only on the check. Therefore, it is extremely important to know in advance the taxes levied in a particular state in order to avoid unpleasant situations.
7. There are also taxes on medicine. The funds raised go to the federal Medicare program. It allows you to use medical services for low-income and elderly people who cannot pay for their treatment on their own.

As you can see, the US budget is formed from many different sources. Their number can mislead an inexperienced person, and even experts often can not give advice on related areas. But such a system allows you to correctly distinguish between sources of income, and the multiplicity of taxes - to draw up an individual plan for each city and each state.

Income tax

What taxes on salaries in the United States need to pay its citizens? It is necessary to pay taxes to absolutely all residents, even those who live in other countries or do not have business in America. Income tax in the United States is usually levied at the federal and state levels, and its value depends on the status of the person and his income. Most privileges are given to single parents and widows / widowers. For married couples, income is considered jointly, while unmarried and unmarried citizens receive a half-time limit. For example, for an unmarried young man, salaries of up to $ 9,000 will be taxed at 10%. If he starts to receive from 9 to 37 thousand dollars, then he will have to pay already 15%. The maximum income tax rate in the United States is 40%.

Why is this fee charged? To set the rate, all the money that a US resident receives from:

• entrepreneurial activity;
• salary payments;
• receipt of benefits and pensions paid by private funds;
• income from the sale;
• government benefits are above a certain minimum.

But, despite a significant percentage of the income tax rate, it has many benefits. If you are engaged in charity work, pay child care expenses, pay medical expenses, then tax deductions can be issued to you.

Corporation tax

Net or gross profit tax applies to absolutely all corporations in the United States. The Internal Revenue Service carefully monitors the integrity of all companies, and tax evasion in the United States and offshore formation is punishable by life imprisonment. How is the net profit of the company with which it must pay tax determined? For this, the following costs are deducted from the total amount of money received by the company:

• wage;
• social security taxes;
• rental and repair costs, depreciation of premises;
• advertising costs;
• interest on loan payments;
• operating losses.

Corporate income tax, as well as income tax, is progressive and is levied in steps. If the company is small, the rate will be 15% for the first 50,000 dollars of net profit. Then it increases: for the next 25,000 dollars another 25% will have to be paid. The tax on profits, which then increased by another 25%, will be 34%, etc. But the US tax system is trying to encourage the development of business, so there are numerous benefits for entrepreneurs. Among the main ones are investment tax credit and accelerated depreciation.

Property tax

The property tax in the USA is levied on all property that a person owns. Whether it is real estate, cars, securities, land, an American resident must pay a certain fee for ownership. Fortunately, it is not very big. The interest rate is from 1 to 4% depending on the state. Due to the property tax, the states of the United States are almost fully subsistent. The fact is that the income tax levied at the regular level is usually quite insignificant and cannot provide all the needs of an administrative unit. But property tax provides about 80% of the state budget.

Characteristics of the tax system in America

The United States consists of 50 states, each of which has its own tax payments and laws. Nevertheless, despite the diversity, all of them are united by the general characteristics of the tax system in America.

• The main feature of the tax system in the United States is the progressive nature of taxation, which allows you to accrue the interest rate on taxes in accordance with the level of income of a person or corporation. For example, a single person with an income level of $ 6,000 will pay a PN in the amount of 15%, and a single mother with an income of $ 10,000 will be charged a 10% rate.
• Discretion of taxes. Corporate income taxes are strictly delineated by law. A higher rate will be applied only to a strictly defined amount of income.
• Regular changes in tax legislation make it possible to react sensitively to the requirements of the economy and apply either stimulation or growth containment methods.
• Equality of all people with equal income - the US tax system does not allow indulgences and exceptions to the rules, therefore, people in the same living conditions and with approximately the same salary will have the same tax level.
• A fixed minimum tax-free income level is also one of the main characteristics of the NS in America. There is a certain figure for income tax, before which a citizen is not required to pay a tax rate from his own funds. For example, a person receiving $ 3,000 per month will not pay PN.
• The presence of a large number of taxes, discounts, deductions allows the tax system to be more flexible and convenient for the population. Although all kinds of fees make up the majority of expenses for the population, in difficult life situations people can take advantage of exceptions to the general rules.
  

Pros and Cons of Taxation in America

The tax system in the United States has many advantages that we have already described. The most important is stimulating the country's economy, competent financial support at the federal level and protecting the population. But this system is not perfect, although in many ways surpasses other countries.

Firstly, the main drawback of the US tax system is the rather high amount of taxes. For example, the average income tax is 25-30%. Agree, this is a lot. Secondly, many Americans do not like the fact that taxes are paid not at the same level, but at as many as three. The need to pay PN at the federal, local, and state levels can greatly impact not only the wallet, but also the time: it will take more than one hour to figure out all the declarations. Also in America, there is a rather strict control over the payment of taxes, so the breakaway from this civic duty can threaten you with a court and a prison.

Comparison of the tax system of Russia and the United States

According to some experts, the tax system in Russia is not perfect. Some economists believe that it can be improved by integrating foreign experience. For this, a comparative analysis of the two systems is carried out. Since the American is one of the most successful, it is they who take it for comparison.

During consideration of these structures, one can notice many significant differences. , ( ), . . . , . " " , , "" . . () , – , . - .

Taxes are the main lever in managing a market economy, without which it is impossible to imagine the country's prosperity. The National Assembly has enormous potential, developing which one can achieve the growth of entrepreneurship, the solvency of the population and many other factors. Although at first glance it may seem that the tax system in the United States is complex and confusing, in fact it is not. Tax laws are passed with a share of impeccable logic and are understandable on an intuitive level. The characteristic of the US tax system is the most positive, and this allows this country to flourish, and its citizens feel safe.