Governments impose many types of taxes. In most developed countries, individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes when they own a home or land, and in some cases estate taxes when they die. In the United States, federal, state, and local governments all collect taxes.
Taxes on people’s incomes play critical roles in the revenue systems of all developed countries. In the United States, personal income taxation is the single largest source of revenue for the federal government. In 2001 it accounted for about 50 percent of all federal revenues. Payroll taxes, which are used to finance social insurance programs such as Social Security and Medicare, account for almost a third of federal revenues. The United States also taxes the incomes of corporations. In 2001 corporate income taxation accounted for 10 percent of federal revenues.
Taxes on people’s incomes play critical roles in the revenue systems of all developed countries. In the United States, personal income taxation is the single largest source of revenue for the federal government. In 2001 it accounted for about 50 percent of all federal revenues. Payroll taxes, which are used to finance social insurance programs such as Social Security and Medicare, account for almost a third of federal revenues. The United States also taxes the incomes of corporations. In 2001 corporate income taxation accounted for 10 percent of federal revenues.
