Different Income Tax Acts Across the World: A Comparative Review
Income taxes, also known as personal income taxes, are one of the most common forms of taxation across the world. Every country has its own set of income tax laws and regulations that taxpayers must abide by. In this article, we will explore some of the different income tax acts from around the world.
The United States – Internal Revenue Code
In the United States, the Internal Revenue Code is the federal tax law that governs personal income tax. This code is extensive, containing over 3 million words. The law defines different types of income, deductions, exemptions, and tax credits. The system is progressive, meaning that those who earn more pay a higher percentage of their income in taxes.
India – Income Tax Act
The Income Tax Act is the main income tax act in India. The act was first introduced in 1961 and has been amended several times since then. The act covers various aspects of the income tax system, including definitions of taxable income, exemptions, deductions, and collection and recovery of tax.
United Kingdom – Income Tax Acts
In the UK, there are several income tax acts that govern personal income tax. These include the Income Tax (Trading and Other Income) Act, the Income Tax (Earnings and Pensions) Act, and the Income Tax Act. These acts cover a range of topics, including taxable income, deductions, exemptions, and tax rates.
Canada – Income Tax Act
The Canadian Income Tax Act is the federal law that governs personal income tax in Canada. The act was first introduced in 1917 and has undergone numerous amendments since then. The act defines taxable income, deductions, exemptions, and collection and recovery of tax.
Australia – Income Tax Assessment Acts
In Australia, there are two income tax acts that govern personal income tax. These are the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. These acts cover a wide range of topics, including definitions of taxable income, deductions, exemptions, and tax rates.
Conclusion
While income taxes are a widely-adopted form of taxation, the specific laws and regulations governing them vary greatly from country to country. The United States, India, the United Kingdom, Canada, and Australia each have their own set of income tax acts that taxpayers must abide by. Understanding the specific laws and regulations of the country in which you are earning income is important for complying with tax laws and regulations.
What is the Income Tax Act?
The United States government, since its formation, has levied taxes on personal and corporate income to help fund public projects and programs such as the military, the construction of public roads and bridges, as well as to help fund government programs such as social security. The taxation model was developed through numerous pieces of legislation, that each aimed to establish an equitable and progressive system to supply tax rates based off an individual’s income.
The income tax is a progressive model and was originally developed through the Income Tax act of 1798. The Income Tax Act of 1798 was a British law, which was applied to United State citizens in the form of a progressive model. The original Income Tax Act instituted tax rates of 0.08% on income above 60 pounds and 10% on income above 200 pounds annually.
This tax proposal was later affirmed in 1814, where it was regarded as the foundation for the equitable and modernized taxable system in the United States of America. Although the tax was never imposed on the United States (following the treaty of Ghent) the income Tax Act of 1798 established the framework for the present-day progressive income tax system.
The Income Tax Act that fortified the taxation system of modern America was established in the passing of the 16th Amendment. This particular amendment awarded taxation power to the governing bodies of the United States. That being said, the tax laws of the Federal government and the coordinating state and local governments are enshrouded in complexities and ever-changing regulations.
As a result of these conundrums, numerous Income Tax Acts or pieces of legislation are seemingly passed every presidency that further establish and outline the tax brackets, the corresponding tax rates, and the compliance or regulatory issues that go into the taxation model. Typically an Income Tax Act will be established based on the macro-economic needs of the taxing authority or country.
For instance, if the gap between the top 1% and the middle class in America is continuously widening, a President may institute an Income Tax Act to effectively lower the tax rates of the middle earners of the country while raising the tax rates of the highest bracket. Regardless of the initiative, an income Tax Act will effectively alter the way in which the country imposes the income tax on its citizens.
