Taxation in the United States

The United States of Americais afederal republicwith autonomousstateand local governments.Taxesare imposed in the United States at each of these levels. These include taxes on income, payroll, property, sales, imports, estates and gifts, as well as various fees. In 2010 taxes collected by federal, state and municipal governments amounted to 24.8% ofGDP. In theOECD, onlyChileandMexicotaxed less as a share of GDP. The United States also has one of the mostprogressive taxsystems in the industrialized world.

Taxes are imposed on net incomeof individuals and corporations by the federal, most state, and some local governments. Citizens and residents are taxed on worldwide income and allowed a credit for foreign taxes. Income subject to tax is determined under tax accounting rules, not financial accounting principles, and includes almost all income from whatever source. Most business expenses reduce taxable income, though limits apply to a few expenses. Individuals are permitted to reduce taxable income by personal allowances and certain nonbusiness expenses, including home mortgage interest, state and local taxes, charitable contributions, and medical and certain other expenses incurred above certain percentages of income. State rules for determining taxable income often differ from federal rules. Federal tax rates vary from 10% to 39.6% of taxable income. State and local tax rates vary widely by jurisdiction, from 0% to 13.30% of income, and many are graduated. State taxes are generally treated as a deductible expense for federal tax computation. In 2013, the top marginal income tax rate for a high-income California resident would be 52.9%.

The United States is one of two countries in the world that taxes its nonresident citizenson worldwide income, in the same manner and rates as residents; the other isEritrea.^[7] The Court upheld the constitutionality of the payment of such tax in the case of Cook v. Tait, 265 U.S. 47 (1924).

Payroll taxesare imposed by the federal and all state governments. These include Social Security and Medicare taxes imposed on both employers and employees, at a combined rate of 15.3% (13.3% for 2011 and 2012). Social Security tax applies only to the first $106,800 of wages in 2009 through 2011. However, benefits are only accrued on the first $106,800 of wages. Employers must withhold income taxes on wages. An unemployment tax and certain other levies apply to employers.

Property taxesare imposed by most local governments and many special purpose authorities based on the fair market value of property. School and other authorities are often separately governed, and impose separate taxes. Property tax is generally imposed only on realty, though some jurisdictions tax some forms of business property. Property tax rules and rates vary widely.

Sales taxesare imposed by most states and some localities on the price at retail sale of many goods and some services. Sales tax rates vary widely among jurisdictions, from 0% to 16%, and may vary within a jurisdiction based on the particular goods or services taxed. Sales tax is collected by the seller at the time of sale, or remitted as use tax by buyers of taxable items who did not pay sales tax.

The United States imposes tariffs or customsduties on the import of many types of goods from many jurisdictions. These tariffs or duties must be paid before the goods can be legally imported. Rates of duty vary from 0% to more than 20%, based on the particular goods and country of origin.

Estateandgift taxesare imposed by the federal and some state governments on the transfer of property inheritance, by will, or by life time donation. Similar to federal income taxes, federal estate and gift taxes are imposed on worldwide property of citizens and residents and allow a credit for foreign taxes.

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In order to have an effective tax system, government must have criteria or standards. One such criterion is that a tax yields enough revenue.

A second criterion is clarity. Tax laws should be written so that both the taxpayer and tax-collector can understand them. This is not an easy task but people seem to be more willing to pay taxes1, when they understand them. A third criterion is ease of administration. A tax should be easy to collect.

A final criterion is fairness. Taxes should be imposed justly. However, this is hard to do because people do not always agree about what is or is not fair when it comes to taxes2.

In general taxes are based chiefly on two principles: the Benefit Principle3 and the Ability-to-Pay Principle4.

The Benefit Principle of taxation is based on two ideas. First, those who benefit from government services should be the ones to pay for them. Second, people should pay taxes in proportion to the amount of services or benefits they receive.

The Ability-to-Pay Principle of taxation says that people should be taxed according to their ability to pay, no matter what benefits or services they receive.

Finally, the only means most people have of paying taxes is the income they earn. Since the benefits of government services to individuals are hard to measure, the other basis for distributing taxes is

Income.

TAXATION IN THE UNITED KINGDOM

Taxation in the United Kingdom may involve payments to a minimum of two different levels of government: The central government (HM Revenue and Customs) and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England and Wales, Council Tax and increasingly from fetes and charges such as those from on-street parking. Originally it taxed a person’s income regardless of who was beneficially entitled to that income, but now a person owes tax only on income to which he or she is beneficially entitled. The second largest source of government revenue is National Insurance Contributions. The third largest source of government revenues is value added tax (VAT), and the fourth-largest is corporation tax. UK source income is generally subject to UK taxation no matter the citizenship nor the place of residence of the individual nor the place of registration of the company.

For individuals this means the UK income tax liability of one who is neither resident nor ordinarily resident in the UK is limited to any tax deducted at source on UK income, together with tax on income from a trade or profession carried on through a permanent establishment in the UK and tax on rental income from UK real estate.

Individuals who are both resident and domiciled in the UK are additionally liable to taxation on their worldwide income and gains. For individuals resident but not domiciled in the UK, foreign income and gains have historically been taxed on the remittance basis, that is to say, only income and gains remitted to the UK are taxed.

TAXES AND TAXATION IN UKRAINE

Taxation is a system of compulsory contributions levied by a government on persons, businesses, and property used as a source for government expenses and other public purposes.

Fiscal policy means government efforts to keep the economy stable by increasing or decreasing taxes or government spending. For many years, the government tries to raise taxes to fund more and more social and defense program. Besides, government at every' level is financed through the collection of taxes. Under state and local laws organizations and individuals are required to compute their tax liability, complete the necessary' forms, and pay the taxes due. Many features of taxation, both in the imposition and collection of taxes, are the same in many countries. Government expenses are growing, so, their need in money is big.

Under state and local laws, businesses and individuals pay many kinds of taxes: state and city income taxes (individuals pay graduated income taxes), social insurance and other payroll taxes, employment taxes, real-estate taxes. Businesses pay taxes on profits and capital, turnover taxes, export/import taxes, excise taxes, sales taxes and of course, value-added taxes.

The fiscal system of Ukraine includes taxes, other compulsory payments to the budget and state purpose-oriented funds. The system of taxes includes general state and local taxes and duties. General state taxes: payments with the same mechanism of performance all over the territory of Ukraine (single dates of payment, benefits, rates). They include value-added tax, excise duty, income tax of citizens, enterprise income tax, land tax, fiscal license tax, tax on the owners of vehicles ; compulsory state pension insurance, charges to State innovation fund, etc. The local taxes and duties include advertising tax, rates, hotel duties, parking tax, tax for issuing a release for location oftrade and service objects, tax for the right to use the local symbolism. It has been announced by legislation that the fiscal system of Ukraine is based on the following principles: the promotion of production business activities; liability (act under state compulsion); equality; stability; principle of social justice; equivalence and proportionality; compensation. The value-added tax (VAT) is an indirect tax added to the price of goods, works, or services for sale on the territory of Ukraine, import or export.