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Consumption tax in the US reduced

Consumption tax. USA

In a latest document from the Tax Foundation (TF), it was noted that, the largest Organization for Economic Cooperation and Development (OECD) is more inclined to the proceeds from the consumption tax, the United States prefer more personal income tax, while at the raising relatively is differb a little from the consumption tax.

TF said that “this difference of political issues, given that consumption taxes raise revenue with less economic damage than individual income taxes”

According to the recent data for 2013, consumption taxes were the largest source of tax revenue for the OECD countries, increasing by an average of 32.7 percent of their tax revenues. However, taxes on consumption rose by only 17.4 per cent of revenue for the United States, mainly because the United States is the only OECD country without value-added tax (VAT). Instead, most governments states in the US use the retail sales tax on the final sale of most goods and excise taxes on the production of goods such as cigarettes and alcohol.

The United States instead relies heavily on individual income tax, accounting for 38.7 percent of total government revenue in 2013, compared with the OECD average of 24.8 percent. TF said that the income taxes are levied directly on the income of an individual and, as a rule, are income. However, many countries, including the United States, also impose a personal income tax on investment income such as capital gains, dividends and interest, as well as income “transit” (where the business income of a legal entity is a tax tax return of the individual owner. One of the smallest sources of tax revenue has been the corporate income tax in 2013, both the United States and the OECD. US federal, state and local governments collected 8.4 per cent of their total tax revenue from corporate earnings this year, compared with 8.5 percent on average for the OECD countries.

Author: Olena Kutova
senior lawyer of the Finance Business Service company