Taxes in the USA

Taxes in the USA are basically configured by three different entities: local government, state government, and federal government.

Local taxes are often thought of as sales tax, the extra six or seven cents added on to every dollar of purchases made in the town. This money can possibly go towards municipal buildings, schools, park improvement, transit, and paying for the police and fire departments. There is often a vote to raise or lower sales tax on a town-by-town basis.

The money from state taxes often goes towards road construction and bridge repair, paying for state government officials and buildings, etc. State taxes include income tax and property tax. Many states also have what has been dubbed “sin” taxes which are additional taxes on items such as cigarettes or alcohol.

Federal taxes are a little more in-depth and difficult to understand. Federal taxes go towards paying Medicare, Social Security, and government officials, as well as several other items. Federal taxes include income tax, gift tax, estate tax, and many, many other taxable items. The tax system is set up on a scale, indicating individuals who have a higher salary pay more in taxes. On average, Americans are estimated to pay 40% of their annual income in taxes.

On the other hand, there are several options for tax breaks. Couples or individuals with children receive a tax credit, particularly if they are paying for daycare. New home buyers also receive tax incentives to help stimulate the economy. Retirement accounts and charitable contributions are two other ways to receive tax deductions.

While most Americans agree they are paying too much in taxes, compared to several other nations we are relatively low. The great partisan debate is and always will be this: are our taxes still too high, or are they too low for what we want to achieve? Or are we getting too much/not enough as citizens for how much we pay?