Types of taxes in the United States of America

Types of taxes in the United States of America

Taxes in America are of two types, federal taxes that go to the benefit of the central government, and taxes imposed by state and local governments.


The types of federal taxes and taxes levied by state and local governments are similar, but some taxes are specific to only the federal government. For example, customs on imports from abroad are owned by the federal government (customs collection in America is done through a federal agency called U.S. Customs and Border Protection.


This agency is affiliated with the Department of Homeland Security. The US Constitution prohibits US states from imposing customs duties on goods imported from other US states.


Types of taxes in the United States of America

The most important taxes in America are the following:


Income taxes

These taxes are imposed on individuals and companies and include an alternative minimum tax, corporate income taxes, and capital gains taxes.


Federal income taxes in America are progressive, meaning that they increase as an individual's annual income increases. For example, an individual's annual income of no more than $8,925 is taxed at 10%, but an individual's annual income over $400,000 is taxed at 39.6%.


These percentages change from time to time (when Republicans dominate Congress they lower the rate of escalation, meaning they flatten it, and when Democrats control Congress they make the escalation more severe, as is the case now).


In the American tax system there are a lot of tax deductions. For example, there is a general deduction for all American citizens called standard deduction. The value of this deduction is currently $6,200.


This withholding means that the IRS will deduct $6,200 from the amount of taxable income that must be withheld.


For example, if my annual income is $50,000, the IRS will subtract $6,200 from it before calculating my tax.


Payroll taxes

In America (as elsewhere) a portion of an employee's salary is withheld as a tax to the government. This tax goes to the federal government and local governments and its value is 15.3%.


Property tax

Tax paid by a person on his real estate. This tax goes to local governments and its value ranges between 0.2% and 4%. This tax differs from the wealth tax, which covers all one's property. Wealth tax is prohibited by the US Constitution (unless the proceeds are distributed among the US states according to the number of their souls).


Sales tax sales tax

Tax paid by the seller for each sale. Its value in America ranges between 1% and 10%. This tax is considered an indirect tax on the buyer, because the seller collects its value from the buyer.


Local taxes ex

Taxes imposed by the government on sellers who sell items deemed harmful to society, such as tobacco, alcohol and petroleum products. These taxes are indirect taxes on the consumer because they lead to higher prices for tobacco, alcohol and petroleum products. The US federal government takes a tax of 4.86 cents for every liter of motor fuel (gasoline), and a tax of 6.45 cents for every liter of diesel.

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