Taxation in the United States. Taxes and fees

Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation. United States taxation includes local government, possibly including one or more of municipal, township, district and county governments. It also includes regional entities such as school and utility, and transit districts as well as including state and federal government.
The USA Tax Act (H.R. 269), short for "Unlimited Savings Allowance", was a bill in the United States Congress for changing tax laws to replace the federal income taxes with a progressive consumption tax on households and a value-added tax on businesses. The first bill (S. 722) was introduced in the United States Senate in April 1995 by senators Sam Nunn (D-Ga.) and Pete Domenici (R-N.M.).
Taxes and fees imposed by federal, state or local laws:

• Alternative Minimum Tax (AMT)
• U.S. capital gains tax
• Corporate income tax
• U.S. estate tax
• U.S. excise tax (includes taxes on cigarettes and alcoholic beverages)
• U.S. federal income tax
• Federal unemployment tax (FUTA)
• FICA tax (includes Social Security tax and related programs)
• Gasoline tax
• Generation Skipping Tax
• Gift tax
• IRS penalties
• Local income tax
• Luxury taxes
• Property tax
• Real estate tax
• Recreational vehicle tax
• Rental car tax
• Resort tax (also known as Hotel/Motel tax, occupancy tax)
• Road usage taxes (Commercial Vehicle Operators)
• Sales tax and equivalent use tax
• School tax
• State income tax
• State unemployment tax (SUTA)
• Tariffs
• Telephone federal excise tax
• Vehicle sales tax
• Workers compensation tax.

The Federal tax law is administered primarily by the Internal Revenue Service, a bureau of the Treasury. The U.S. tax code is known as the Internal Revenue Code of 1986 (title 26 of the United States Code). The Code's complexity generally arises from two factors: the use of the tax code for purposes other than raising revenue, and the feedback process of amending the code.
While the main intent of the law is to provide revenue for the federal government, the tax code is frequently used for public policy reasons i.e., to achieve social, economic, and political goals. For example, to encourage home ownership, the tax law provides a deduction for mortgage interest expense on debt secured by primary residences. In addition, the law does not allow a deduction for renters for rent paid to offset the advantage of nonrecognition of exclusion of imputed owner occupied rent. An income tax system that favors neither renting nor owning homes would not allow the mortgage interest deduction and would tax the imputed rent for owners who live in their own homes.
Because the government uses the tax code as an instrument of social policy, the code as a whole appears to some critics to lack a coherent organizing principle. The purported lack of a coherent organizing principle arguably has become magnified over time, due to the interplay between successive legislative amendments and regulatory changes to the law and the private sector responses to those amendments and changes. For instance, suppose that Congress enacts a tax credit to encourage a particular type of activity. In response, a group of taxpayers who are not the intended beneficiaries of the credit re-order their affairs, or the superficial aspects of their affairs, to qualify for the credit. Congress responds by amending the code to add restrictions and target the credit more effectively. Certain taxpayers manage to use this change to claim additional benefits, so Congress acts again, and so on. The result is a feedback loop of enactment and response, which, over an extended period of time, produces significant complexity.
Federal payroll taxes in the United States are primarily collected by employers on behalf of the Internal Revenue Service (IRS). The Federal income tax uses a system of direct withholding. Employers deduct part of a taxpayer's income directly from their payroll checks. Self-employed individuals make similar payments to the government. The amount of withholding is calculated based on an employee's expected annual salary and the employee's living situation (married or unmarried, number of dependents, other factors). Withholding does not perfectly calculate an individual's tax each year. The difference between the amount withheld and the actual tax is either paid to the government after the end of the year, or refunded by the government. Withholding is done on an honor system with penalties imposed on individuals who do not have enough withheld (or make enough estimated tax payments) during the year. The amounts deducted can be found in IRS Publication 15, also referred to as Circular E. For farmers, the rules are outlined in Publication 51 (Circular A). The IRS's Publication 505 can also be used to estimate the amount of tax withheld.
Some individuals choose to withhold more of their estimated tax burden than necessary, using the withholding and the refund check at the end of the year as a way of "forced savings" (at zero percent interest). Conversely, other individuals withhold as little as possible, using the general rule that, for purposes of avoiding the penalty for underpayment of estimated tax (a "penalty" that is essentially analogous to an interest charge that covers the periods from each of four specified interim payment due dates to the initial due date for the filing of the tax return), the total tax paid or constructively paid by April 15 of the year following the tax year in question (i.e., the initial due date for filing the return) need be no more than 100% of the previous year's tax liability. Such individuals thus pay a relatively large amount on April 15. Many individuals fall somewhere in the middle.
Income tax must be withheld from payments of wages based on one of two methods: tables of withholdings, and the wage bracket method. Under each method, the tax to be withheld is calculated by first reducing taxable wages by an exemption allowance as claimed by the employee on the Form W-4 he or she submits to the employer. The exemption allowance claimed by the employee may include exemptions for dependents as well as exemptions equivalents for the tax effect of deductions and credits.
Income tax must also be withheld from many payments to foreign persons. The amount withheld is generally a flat 30% of the gross amount of the payment. Such rate may be reduced, even to zero, under income tax treaties between the U.S. and the payee's country of residence.
Income tax at a flat 10% is also required by payors of interest or dividends if the IRS has notified the payor of the requirement. These "backup withholding" provisions were designed to reduce tax evasion.

All withholding taxes are merely prepayments to be applied to the taxpayer's tax liability for the year. All are refundable in the same manner as other payments (such as estimated tax payments) upon filing tax returns following year end.