| The tax imposed by the U.S. government on the | | | | |
| taxable incomes of individuals, corporations, | | | | Several specific taxes, in addition to the |
| trusts and estates is known as federal income | | | | general income tax, are also collected by the |
| tax. Personal income taxes are payable on the | | | | federal government. For example, the social |
| total income of the individual (after some | | | | support programs such as social security and |
| permissible deductions). Corporate income | | | | Medicare are funded by taxes on personal |
| taxes are payable on the gross profit, the | | | | earned income. Estate taxes are also levied |
| difference between the total receipts and | | | | on inheritances. |
| total direct and indirect expenses. | | | | |
| | | | It is income tax that forms the bulk of the |
| Federal income tax was imposed for the first | | | | taxes collected by the U.S. government. |
| time by the U.S. government in 1861 to | | | | Personal income tax rates range from 0 to 35 |
| finance the Civil War. A tax of 3 percent was | | | | percent, depending upon the individual's |
| levied on incomes above $600, which rose to 5 | | | | total income. |
| percent for incomes above $10,000. These | | | | |
| rates were raised in 1864. A new income tax | | | | Income tax is called a progressive tax |
| act was enacted in the late 1800s. After the | | | | because its levy is based on the total income |
| Civil War, income tax was rescinded in 1872. | | | | of individuals: the higher the income, the |
| | | | more the tax. Corporate tax rates also range |
| In the present scenario, the revenues of the | | | | from 0 to 35%. A corporation pays taxes on |
| federal government mainly accrue from | | | | its profits and may choose to distribute its |
| personal and corporate income taxes. Earlier, | | | | profits after tax as dividend to its |
| tariffs on imported goods constituted a large | | | | shareholders. Despite the fact that the money |
| chunk of the government?s revenues, but, at | | | | paid as dividend has been taxed at the |
| present tariffs represent only a minor | | | | corporate level, it is taxed again in the |
| portion of federal revenues. Other non-tax | | | | hands of the shareholder at the personal |
| fees are also levied, which recompense | | | | level. This is known as double taxation. The |
| agencies for services or fill specific trust | | | | tax paid on the dividends by an individual is |
| funds. | | | | called dividend tax. |