The reason citizens pay income tax is so that the government can have the funds to build libraries, roads, and fire and police stations. Income tax is also used for welfare and social security programs. In addition to income taxes, there are also sales taxes, corporate taxes and property taxes.Know More
The two types of taxes that a taxpayer pays include federal tax and state tax. Federal income tax is used by the U.S government for the overall improvement of the country. Congress decides on a tax rate as well as how the federal income tax money is utilized before the Internal Revenue Service gathers the necessary taxes. State income taxes are used by individual States, but there are some that don't charge income taxes.
Any citizens who receive any type of income have to pay income taxes. Income can be gained from a salary, capital gains, gambling, operating a small business or investing in the stock market.
In 2011, it was estimated that almost 50 percent of the U.S. budget, which was approximately $1.1 trillion dollars, was made up of income taxes. To make sure they aren't paying too much in income tax, individuals should consult with an experienced and trusted tax professional or accountant.Learn more about Taxes
A value-added tax, or VAT, has the advantage of offering an efficient way to raise funds for government programs from a broad taxpayer base. Its primary disadvantage is the effect such costs ultimately have on the consumer. According to the New York Times, VATs are used in every developing country other than the United States.Full Answer >
Qualities of a good tax system include fair payment of taxes among citizens, an adequate tax base, transparency, administrative ease and simplicity, say authors at the Oklahoma Policy Institute. These five conditions create a sound tax system that ensures equal payment and representation among citizens and secures enough revenue to cover the cost of basic public services.Full Answer >
The formula for calculating income tax is the product of the total amount of taxable income multiplied by the tax rate, according to the Internal Revenue Service. The formula to account for multiple marginal tax rates requires multiplying the total amount of money earned in each successive bracket by the tax rate and adding the values together.Full Answer >
The main sources of government income are income, sales and property taxes and fees. State, county and local governments also receive grant money from the federal government.Full Answer >