Tax Systems and Structures

Abstract

This chapter discusses the tax structures of governments in the United States. An overview of current tax sources will be provided, followed by consideration of issues related to equity and efficiency in taxation. The chapter focuses on the two criteria that are usually at the heart of discussions about tax structures: equity and efficiency. The United States federal government relies primarily on income taxes. Income taxes on individual taxpayers comprised 46.3% of the government’s total revenues in 2001. Taxpayers should be able to determine how much they pay rather than having hidden taxes, the rules should be applied consistently, and provisions should be made for hearings and appeals. Three primary types of taxes are used in the US: income and payroll, sales, and property taxes. The chapter provides some historical overview of these taxes and examines the current tax bases and rates used by federal, state, and local governments.