The U.S.

tax system is established on laws giving Government authority to collect tax from

individuals and corporations to pay for the service. The U.S. tax system has a separate level of

taxation at each level of federal, state, and local imposed by their governments. The overall

taxation is based on progressive tax system in which individuals with higher income pay more

taxes. This progressive tax system is an essence of taxation in U.S. Principles for designing a tax

system are set of frameworks on which overall U.S. tax system is based. The two major principles

on which the idea of taxation is based are: 1. Benefit those who are paying taxes and that the

services they are receiving against them should be relative to the taxes being paid. The issues that

might be faced, however, be that the concerned people might not be monetarily equipped enough

to afford them or that the amounts might be a little difficult to be determined. Another flaw of the

system might be to cater the most to the people who are inputting the minimum share in the tax.

2. The other principle of taxation relies on the idea of ability-to-pay, taxes should be paid by those

who are equipped enough to do so. However, the share is yet hard to chalk out and is also based

on the sole assumption that people with higher income have lesser worries to deal with. The notion

of collecting a higher share of tax money from high earners is based on the reasoning that these

people can pay the government more to fulfil the needs of the underprivileged people.

The other principles considered to establish a good tax policy include impartiality, effectiveness,

certainty, and equity. Tax system should be impartial and fair to minimize the burden of tax laws

on decisions of taxpayers. Tax system should be effective and simple to understand and attain

income from. It should be certain about the rules and regulations to help improve the mutual

understating between taxpayers and government. It should be levied on the principle of equity in

which tax amount should rely on income hierarchy.