Alternative methods of the income tax

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Alternative Methods of the Income Tax

1 . Introduction

This will discuss the income tax system in the United States including a brief history of US income taxes and the kinds of income taxes . The other part will expand by explaining some alternative methods of income tax , such as consumption tax , value added or goods and services tax , flat tax , pigovian tax , etc . In the conclusion , a discussion on some of the most recent proposed income tax changes will

attempt to complete the resolution of issues raised in the

2 . Analysis and Discussion

2 .1 Introduction of US Income Taxation

Taxation is one of the inherent powers of the state in all governments in the world . No government could exist without taxation as tax levied is government revenues which are to finance the expenses of government . As an inherent power of the state , the power of taxation is deemed to have co-existed with the state and therefore the US Constitutions does not create said power but the same must be considered to have provided limitations to such inherent power of the state

2 .1 .1 What is an income tax

An income tax is a tax which is imposed on the financial income of individual persons or business entities which include partnerships and corporations . Hence basically there are two kinds of income taxation . One is personal income taxation while the other one is corporate income taxation . It is a tax imposed on the privilege of individuals and legal entities to earn revenues in the state , hence persons subject to tax could be residents or non residents of the US Those resident could also be citizens or not while those not residing may be also US citizens or not citizens

Income taxation basically assumes the presence of revenues or incomes earned . Hence individuals will have to pay taxes from their compensation income from employment , conduct of business , fruits of their properties and all other increase sin their wealth which are declared by law to be part of their income or revenues except only those declared to be exempt from taxation . Legal entities include partnerships and corporations hence for purposes of income taxation legal entities are subject to corporate income tax as distinguished from personal income taxes

In the computation of the taxes , the law allows deductions from the gross revenues of individuals and legal entities to arrive at their taxable income and after which income tax rates are applied to get the income taxes for the period . If there are allowed tax credits the same may be allowed to be deducted from the assessed taxes and any difference could be the income taxes due or income tax refundable if the tax credits turned out to be higher

As part of income taxation the US tax authorities also impose income taxes from trusts , decedents ' estates , and certain bankruptcy estates . These are separate from personal or individual and corporate taxation since legal...