Infographic: How the U.S. Tax System Works
One issue that most lawmakers and voters agree on is that our tax system needs reform. It is confusing, complex, and favors some individuals and economic activities over others. Exactly how to improve the tax code, however, can be a hotly contested issue — which is further complicated by common misconceptions about how the current system works.
Many observers have called for simplifying the current tax code to reduce preferences and make it easier to understand. The Administration in its recent budget proposed tax reforms that would target higher-income taxpayers.
Before we can begin to assess the value of specific proposals, it helps to look at the big picture of how the system works. Check out the infographic below for an overview of the system and then test how much you have learned with our tax quiz.
Further Reading
Infographic: How Are Capital Gains Taxed?
The capital gains tax, which is a levy on said profits, is categorized as part of individual income tax revenues, but it is administered at a lower rate than ordinary income.
Quiz: How Much Do You Know About the U.S. Tax System?
The lengthy and complex United States tax code can be difficult to understand. Take our quiz to see how much you really know.
No Tax on Social Security Would Weaken Both Social Security and Medicare
Republicans in Congress are considering several new tax cuts that would reduce federal revenues by trillions of dollars over the next decade.