Summary: The United States Tax System

Although taxes are one of the obstacles in the process of the creation of wealth, they are still essential in the continuity of the government and the economy therefore are necessary for people to understand and follow.

The current tax system in the United States is based upon the Revenue Act of 1913, also known as the Tariff Act, which re-imposed the implementation of the federal income tax after the ratification of the sixteenth amendment. The Revenue Act of 1913 significantly reduced the average tariff on imported goods from 40% to 25% in the hopes of an increase in competitive prices as well as efficiency. The federal income tax is easily the most debated tax in the United States although surprisingly it is not the highest tax individuals

These two elements include Social Security and Medicare taxes which are imposed on both employees and employers. Additionally, payroll taxes are imposed by both federal and state governments. The Social Security tax pays for the retirement, disability, and survivorship benefits received by numerous Americans every year. As of 2017, the Social Security tax rate is 12.4%. Half of the tax is paid by the employer, and the other half of the tax is paid by the employee. The Social Security tax rate has an income cap which has the potential to affect the tax rate applied which currently is $127,200. Therefore, any amount earned above $127,200 is Social Security tax-free. On the other hand, the current tax rate for Medicare is 1.45% from the employer and 1.45% from the employee. Payroll taxes have severely increased as a revenue source for the federal government whereas corporate income taxes have decreased as a share of revenue throughout the

For example, the head of a household is entitled to a $9,350 deduction while a single status individual is authorized a $6,350 deduction. Individuals who are married and filing jointly may receive a deduction of $12,700 and additionally there is a personal exemption deduction of $4,050 available.

Although there have been many complaints and concerns regarding the United States tax system and the extent of progressive taxation, I agree with the United States implementation of a progressive tax system and believe that this system should continue throughout the years. I think it would be extremely unfair to require low-income individuals to pay higher in taxes than high-income individuals in any aspect.

In conclusion, the United States tax system is a complicated, elaborate system which will most likely never make every American citizen happy, however it is an essential part of the United States system and provides the continuance of smooth operations within the government, economy, and