United States
The United States imposes an income tax on individuals, corporations, trusts, and certain estates. This tax is imposed on the income event, such as the receipt of wages. Another example of an income event is the realization of a gain on the disposition of property; that is, the appreciation on the value of property is not taxed until that property is sold (i.e., when the gain is "realized").
The U.S. income tax was first proposed during the War of 1812, but was defeated.[4] In July 1861, the Congress passed a 3% tax on all net income above $600 a year (about USD 10,000 today). Income taxes were enacted at various times until 1894, but were not imposed after 1895 when an 1894 tax act was found to be unconstitutional. In response, the 16th Amendment was ratified in 1913.[4] Ratification has been unsuccessfully disputed by some tax protestors claiming, among other things, that slight errors in punctuation in the various instruments ratified by the several states invalidates the ratification. Tax protestors have also made other arguments about the validity of the U.S. income tax, without success (see Tax protester arguments).
The 2007 individual federal income tax rates are between 10% and 35%, depending on income and family status. People with relatively low incomes may pay no income tax, or may receive earned income tax credits (tax benefits); however, this does not include income based payroll taxes that fund Social Security and Medicare. The Center on Budget and Policy Priorities states that three-fourths of taxpayers pay more in payroll taxes than they do in income taxes.[15] IRS data indicate that the wealthiest 5% of taxpayers (ranked by AGI, counting only returns with positive AGI) paid roughly 60% of all income taxes; the bottom 50% of taxpayers account for just 3% of income taxes paid.[16]
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