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TAXES

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Americans are taxed in order to raise revenues to finance governmental activities. Taxation has never been popular. Much time and energy have been devoted by the legislature trying to devise a system that requires everyone to pay his/her fair share. Taxes are generally based on the benefits received and/or on the ability to pay. Two of the most common revenue raising taxes are the personal income tax and the sales tax. DS the Body

Personal Income Tax Side Heading (at the left, underlined, CAP each Major Word)

The personal income tax is the tax individuals are required to pay on their earnings. Employers deduct this tax from employees' paychecks. When employees file their income tax returns, they will either receive a refund for any excess which has been paid or they will have to pay the balance due. DS the Body

Personal income taxes have been the Federal Government's largest single source of revenue and a major source of state revenues as well. On the federal level, the personal income tax is a graduated tax, which means the more you make, the higher the percentage of your income you pay in taxes (Rachman and Mescon 529). Parenthetical Citation: author/page; Long Quote: 1” indent, DS, 4 lines

With the Tax Reform Act of 1986, the highest tax an individual will pay is 33 percent. The amount an individual pays changes with each tax reform. In the past, the top tax rate has been as high as 70 percent (Anrig 56). Parenthetical Citation: author/page; DS the Body

Sales Taxes Side Heading (at the left, underlined, CAP each Major Word)

The sales tax is another tax with which most people are familiar. It is a tax that is added to the retail price of goods and services. Two examples of this type of tax are as follows: DS

1. General Sales Tax. The general sales tax is a tax levied by most states on goods and services. The amount of tax and the specific goods and services that are taxed varies by state. Enumerated Items

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2.Excise Tax (Selective Sales Tax). The excise tax is a state tax levied against specific items. Examples of items with an excise tax include tobacco, alcoholic beverages, and gasoline. Enumerated Items

While the income tax is a tax based on the individual's ability to pay, the general sales tax and the excise tax are based on benefits received. For example, taxes collected on gasoline are used for highways. Individuals purchasing gasoline are those who benefit from the construction and maintenance of highways. DS the Body

Works Cited

Anrig, Greg, Jr. "Making the Most of 1988's Low Tax Rate." Money, February 1988, 56-57.

Rachman, David J. and Michael H. Mescon. Business Today. New York: Random House, 1987.

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