Modern evaluation of US tax system

The 13 states that established the United States in 1776 adopted a federal state structure with the constitution they prepared and adopted separately and ratified in 1789. The same constitution and the principle of separation of forces have been accepted. In the framework of federalism envisaged by the Constitution, the federal government as well as the provinces maintain their own legal assets and their own governance. As a result, both the federal government and the state administration have authority over the same geographical area. The administration authority in the US federal system is concentrated in two sources: the federal government and the states. Local governments come from the powers of the provinces. The boundaries of the federal and state governments have been designated by the Constitution. States may use authorities that are not in conflict with the authorities of the federal government or that are not prohibited in the constitution.

The United States is one of the most important representatives of Anglo-Saxon Law. In the field of taxation, as well as the federal government, state and local authorities have various levels of authority. The Constitution of 1789, the federal government, gave the states the right to levy taxes directly without any request, and with the amendment made in 1913, the federal judiciary was granted the right to collect federal income tax. State governments have also retained their right to use these powers within their own borders. Almost 2/3 of all taxes are collected by federal government and 1/3 by state and local governments (Table

1).Sharing of some economic and financial powers among the administrations is shown exactly in Table 2.

Table 1: *Administrative Revenue Share in the US (%)

*Source OECD, Revenue Statistics,1975-2003.

Table 2: *Some Authorities Specialized in the US Constitution

*Source: Ministry of Finance APK Board Publication. No: 2005/366, p.5.

Federal tax administration has a different structure when seen in many other countries. It seems that the Treasury Department is competent in the construction of the tax administration from the Ministry of Finance. The Ministry of Finance generally functions as a policy-making unit, while the Internal Revenue Department affiliated to the Treasury Department is the federal tax administration.

Evaluation and conclusion

The US Tax System has a very detailed structure because each of the federal, state, and local governing bodies is empowered in various forms of financing. Taxpayers may pay taxes not only to the federal government and the IRS, but also to the province where they are affiliated and to the county, municipality or other local government where they live, in the same or different names. For this reason, the US Tax System is rather complicated and puts a lot of duties and responsibilities on the taxpayer. There are more than 7 local tax administrations in the country, and the rates and rules vary from year to year. However, in this regard, the IRS and other units are in an effort to inform and assist taxpayers. Since all the taxes are not levied and collected by a government, in the course of historical development, each administration has concentrated on specific taxes and thus a financial distinction has been made between them.

The most important share in tax revenues is about two-thirds of the personal income received from revenues belongs to company income (corporations) and social security tax. 2/3 of income tax is collected during the year through deduction and tax, and 1/3 is declared and paid the following year.

Significant reductions in tax rates have been made especially in Reagan period due to supply-side economic understanding. In recent years, it has been proposed to introduce a flat-rate sales tax, which is abandoned from increasing rate tariffs and even all other taxes. Such discussions about the system have also increased the interest in the tax system and have made it easier for administrators, who came to govern in the 1980s, to make frequent tax cuts.

It is possible to say that there is such a complicated structure, a surplus of financial units and a large number of taxpayers, at a low level when the tax losses and fugitives in the US tax system are compared with other countries and especially with our country. Among the factors contributing to this situation are the high levels of low income and the high level of tax penalties, the negative response to the tax evaders in the society, and especially the IRS's taxpayers' interests, as well as the local taxation awareness in the country.

Technological restructuring in the financial sector in the country and the urgency of the staff to do their jobs improves the credibility of the taxpayers and thus weakens the resistance against the taxpayer. If the taxpayer is in the case of a creditor, this claim is paid to him immediately. For example, even though a 45-day period is prescribed for the tax return, these replies are handed over to the taxpayer in as little as 2-3 weeks. Indeed, as a result of such approaches, 98% of all taxes collected in the country are automatically paid by taxpayers without any interference.

In order to assist taxpayers who have problems with the tax administration, a taxpayer lawyer unit has also been established. This unit acts like a private defense advocate, not only solving taxpayer problems but also preparing legal proposals for problems and constantly informing the congress about the problems.