In general, there are three major sources of federal tax revenue which include individual income taxes, payroll taxes and corporate income taxes among other sources. However, the federal government gets the very majority of its revenue from individual income taxes which significantly amount to 47% of the total revenue in which the income tax is generally progressive with households high the economic strata paying a bigger share of their income in taxes than what the lower-income households pay (CCH Tax Law Editors Staff, 2015),
On the other hand, state governments obtain income from a variety of sources and income varies from one state to another. However, across all the states, the lion’s share of revenue is from property taxes and sales and gross receipts taxes. Another major source of income for state governments is individual income taxes (CCH Tax Law Editors Staff, 2015),
Citizens are taxed fairly. This is because it is unfair to equate tax percentages of people earning bigger amounts to those that earning little amounts of income. Yes, some individuals are taxed significantly more than others but this is justifiable for they too have it all to pay their share. It will be unfair to tax a poor man the same as a rich man. Fair taxation is not wastage of resources but an act of trying to boost the life of the poor to bring them to equitable income with the rich (CCH Tax Law Editors Staff, 2015),
Tax incidence refers to the way the tax burden is distributed between consumers and firms which much depends upon the relative demand and supply elasticity. The distribution of tax burdens is significantly not the same as the distribution of tax bills. The equity of a tax system is concerned with fair distribution of tax burden among the population. Tax equity should ensure fair distribution of tax depending on the income margin. At whatever incidence, the tax of a low income earner cannot equate that of a higher income earner and vice versa (CCH Tax Law Editors Staff, 2015),
Reference
