An income tax rate is the portion of your income that a government takes in taxes

An income tax rate is the portion of your income that a government takes in taxes. Income taxes in the U.S. are enforced by the federal, most state, and many local governments. The income taxes are fixed upon by applying a tax rate, that can increase as income increases, to taxable income, that is the total income less allowable deductions. There are seven known brackets that taxpayers in the U.S. can fall under depending upon their taxable income. In the U.S. as income rises, higher taxes are applied. Taxation rates may alternate by type or individualities of the taxpayer. However, Personal income is defined as an individual’s total earnings from wages, investment interest, and other sources. Each year, individuals file tax returns to report their taxable income, the tax base for the individual income tax, to the Internal Revenue Service. Beginning with gross income, this formula is embedded in the first two pages of the individual income tax Form 1040, the form individuals generally use to report their taxable income. “Chapter 4 Individual Income Tax Formula.” MCGRAW-HILL’S TAXATION OF INDIVIDUALS AND BUSINESS ENTITIES, by Brian Spilker, MCGRAW-HILL EDUCATION, 2018.
In addition, there are two types of income taxes, federal and state. Federal income tax is a tax that is required by the IRS on the yearly earnings of an individual and of a business. Federal income taxes are applied on all of the forms of earnings of a taxpayer’s taxable income. A tax is collected from individuals and corporations by the city, state, or country where the person lives. When the tax collected is credited to the government of the country’s account, it is referred to as federal tax. Federal tax is the money that is being used by the government of a country to pay for the growth and maintenance of the country. The greatest source of revenue for the federal government comes from the earnings of the citizens of the country. State income tax is different from federal. There are only 43 states that impose an income tax on the persons living in the states, known as a personal income tax. Each state has their own tax system, they tax all taxable income of the residents.
The United Arab Emirates also known as UAE, has one of the world’s highest per-capita incomes right at $49,000. The U.S. however had a per capita income at 26,964. The UAE has no personal income or capital gains taxes. The revenue earned is from their oil industry and pitches a tax-free living to bring forth global companies and talent to modify and enrich their economy more. As a substitute of them creating revenue from personal income, the United Arab Emirates, is indigent on money from oil companies that pay up to 55 percent in corporate taxes. Refugee employees don’t pay for social security in the Arab country. The citizens of UAE must make monthly charities of 5 percent of their total earnings for social security. Employers of citizens as well must make monthly charities of 12.5 to 15 percent of the worker’s base salary for social security and pensions. Other indirect taxes include housing fees, road tolls and municipal taxes. The U.A.E. charges a 30 percent tax on alcohol, and an additional 50 percent sales tax on alcohol sold in Dubai.
The US could not adopt the taxation model of the United Arab Emirates because the per capita income in the UAE is at $49,000 whereas in the United States has a per capita income of roughly $26,964. The cost of living in the United States would have to increase to make up the revenue that is lost by abolishing the income tax. Instead of a 6% sales tax on a $100-dollar item there would be a 25% sales tax on that $100-dollar item. People that make around the average per capita income consumes more than a person who makes more money, so they wouldn’t be able to survive if we adopted that model here in the U.S. Benefits of adopting the model would be that the retail market would go up because if people had more money to spend then they would spend money. Also, this would make the people in the U.S. a lot happier because there are the arguments that their money is being taxed twice and if there were no income tax that would eliminate that argument.