Taxation Homework Help
Tax is a compulsory payment to be made to the government levied by the tax authorities. This tax is used by the government in the Welfare of the society and defense. Every individual on whom the tax is levied has to pay it mandatorily. The non- payment of tax is an offense and punishable by law.
Generally, there are 2 kinds of taxes:
- Direct Tax
- Indirect Tax
Every Country’s has different norms and conditions and different percentages of levying taxes. Some governments apply a flat rate of tax on the income and another levy a progressive form of taxation i.e. with the increase in the income; the tax will be increased.
Direct Tax: It is the kind of tax whose burden cannot be shifted onto another person. It is levied on the Income of the individual and he is liable to pay it himself. He cannot shift the burden of the payment on anyone else. Example: Income Tax and Wealth Tax.
Indirect Tax: Indirect tax is the kind of tax whose burden can be shifted to another person. It is generally levied on the goods and services. This kind of tax’s burden can be shifted to another person such as the manufacturer shifts the burden of excise duty on the retailer and further retailer shifts the burden of excise duty and VAT on the consumer. Example: VAT, Excise Duty, Goods and Services Tax etc.
How is the Tax collected used?
There are several ways in which tax is utilized. These are:
Defense and Security: The major part of the Taxes collected by the government is utilized in the managing the defense and security of the country. The U.S. Government spent about US $ 601 Billion in 2015 on the Defense and Security of the country. It comprises of one of the major expenditures of the country and it is largest in number as compared to any other country.
Social Security: The social security is another major expenditure of the country. The social security expenditure comprises of the retirement and survival benefits paid out to the people and incurring the payments for the disabled people. The U.S. Government spends around 23% of its total federal budget on Social Security.
Paying out the interest on debts: The Country pays out its interests on the debts taken from other countries through the taxes collected. U.S. Government has a National Debt worth the US $ 19.809 Trillion (Approx.). The interest on this debt is very huge.
Safety Net Programs: This refers to the all the aid and helps programs that the government runs for securing and helping the Low and Middle-Class Families in the country. Generally, the Safety Net Programs consist of providing Health Insurance, Unemployment Insurance, Food Stamps, and Low Income Housing Assistance etc.
Other Programs: Other Programs consist of all the other expenditures that are not covered by the above-stated expenditures. It consists of Education Expenditure, Medical Care, Transportation, and Infrastructure etc.
What are the different taxes levied by the U.S. Federal Government?
The U.S. Federal Government levies a number of taxes on the citizens. The main taxes levied are:
Income Tax: Income Tax is the tax levied on the income of the person. Generally, the tax is levied on the income, the business profits or revenues and on any interest so earned. This is a direct tax and its burden cannot be transferred. Most of the states in U.S. follow the progressive taxation method i.e. with an increase in the income, the tax increases; while some states charge a single flat rate of tax on the income of the dwellers. There are other states like Florida which do not levy any tax on the income. The Payroll and Capital Gain is a type of income only and thus included in the Income Tax. The payroll is the pay a person is getting underemployment while Capital Gains refers to the profits earned upon the selling of Assets.
Sales Tax: Sales Tax is the amount of the tax charged on the sale of Goods and Services. This Tax is calculated on the Price at a specified percentage. This type of tax can be applied by State Governments and even by the Municipalities. The rate of tax and the system of taxation varies from one start to another. Where one state does not charge any Sales Tax, the other state may charge a hefty amount as Sales Tax. U.S. does not have integrated Goods and Service Tax.
Property Tax: The property tax is generally levied by the local governments. These are used to fund the local government’s projects. It is the tax levied on the property i.e. real estate of the person. This is charged on the basis of the market value of the property. This tax is deductible from the income. Further, the law states that it can even charge tax on the other assets such as cars etc.
Gift Tax: The gift tax is the tax charge upon the transfer of gift i.e. wealth from one person to another. For this condition, there must be two living people; one accepting and the other giving the gift. The exemption level for taxation is very low for Gift Tax.
Estate Tax: Estate Tax is the tax charged upon the transfer of the estate, will or wealth upon the death of the person. This is similar to the Gift Tax but for this tax, there is a higher exemption level. This tax was introduced to stop the tax- free transfer of assets between the families. They took advantage of the situation.
Hotel Tax: Hotel Tax is the tax on the room rentals of the hotels. These taxes are charged by the local governments. In some areas, it is also called the occupancy tax, room tax etc.
Sin Tax: The sin tax is levied on the products such as Cigarettes, Alcohol etc. The rate of such taxes is generally high because the government tries to discourage the use of these products as they are harmful to the health.
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Here are some topics related to taxation:
Types of Taxes:
- Income Tax
- Corporate Tax
- Sales Tax
- Property Tax
- Excise Tax
- Value Added Tax (VAT)
- Capital Gains Tax
- Inheritance Tax
- Payroll Tax
- Progressive Taxation
- Regressive Taxation
- Proportional Taxation
- Flat Tax
- Dual Income Tax
Taxation and Economic Policy:
- The Laffer Curve
- Tax Incidence
- Taxation and Economic Growth
- Taxation and Income Inequality
- Tax Competition among Nations
Tax Planning and Strategies:
- Tax Deductions and Credits
- Tax Shelters
- Tax-Efficient Investing
- Offshore Tax Havens
- Estate Planning and Taxation
- Transfer Pricing
- Double Taxation Treaties
- Base Erosion and Profit Shifting (BEPS)
- Multinational Corporations and Taxation
- Tax Havens and Offshore Banking
Tax Compliance and Enforcement:
- Tax Audits
- Tax Evasion and Tax Fraud
- Whistleblower Programs
- Tax Collection Methods
- Tax Court and Dispute Resolution
- Tax Code Overhauls
- Tax Policy Changes
- Tax Cuts and Jobs Act (TCJA) in the U.S.
- Value-Added Tax (VAT) Implementation
- Digital Taxation for Tech Companies
Environmental and Sin Taxes:
- Carbon Taxes
- Tobacco and Alcohol Taxes
- Sugary Beverage Taxes
- Pollution Taxes
State and Local Taxes:
- State Income Taxes
- Property Taxes at the Local Level
- Sales Taxes by State
- Municipal Bonds and Taxation
Taxation and Social Programs:
- Social Security Tax
- Medicare Tax
- Unemployment Insurance Tax
- Funding of Social Welfare Programs
Taxation and Technology:
- Online Sales Tax
- Cryptocurrency and Taxation
- E-commerce Taxation
Taxation and Legal Issues:
- Taxation and Constitutional Law
- Tax Avoidance vs. Tax Evasion
- Taxation of Nonprofits and Charities
Global Tax Trends:
- Digital Services Taxation
- Minimum Corporate Taxation (e.g., the OECD's Pillar Two)
- Tax Transparency and Information Sharing
These topics represent a broad spectrum of issues related to taxation, and they are interconnected with various aspects of economics, finance, law, and public policy. Taxation is a critical component of government revenue and plays a vital role in shaping economic and social outcomes in a country.