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Corporate Income Tax in the United States

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Banking Academy

City University of Seattle



Group: 4

Group member:         Tran Thi Ngoc Anh

                                                                        Hoang Kim Hanh

Tran Anh Thu

Le Thu Trang

Pham Thi Bao Trang

Date: November 20th 2015

Table of Contents

A.        The review on the tax system in the United States        

I.        The tax administration system        

II.  The tax policy system        

B.        Corporate Income Tax in the United States        

I.        Overview of Corporate Income Tax        

II.  Main content of Corporate Income Tax in the United States        

1.        Scope of application        

2.        Taxation bases        

3.        Treaty Withholding tax rates        

4.        Tax declaration and submission        



The federal corporate income tax was first instituted in 1909 when income above $5,000 was subjected to a one percent tax rate. Since then it has changed approximately 35 times, with the current top rate at 35 percent. Additionally, many states levy corporate income taxes of their own. Economists have long understood that corporate income taxes are double taxes, since the same income is taxed once as profit, and once as individual income when distributed as dividends to shareholders. Contrary to popular misconception, the ultimate burden of corporate income taxes doesn't fall on corporations, but is instead borne by workers, shareholders and consumers.

The United States corporate income tax rate is the highest in the developed world. In this essay, we will find out the review on the tax system in the United States including tax administration system and tax policy system as well as corporate income tax in the United States.

  1. The review on the tax system in the United States
  1. The tax administration system
  1. Tax Administration’s Capacity

The United States of America is a federal republic with state and local governments. Taxes are imposed in the United States at each of these levels and given various types of authorities by the government. This sector consists of three administrative components. In general, most domestic federal taxes are administered by a part of the Department of the Treasury, namely the Internal Revenue Service. Besides, the Alcohol and Tobacco Tax and Trade Bureau (TTB) complements taxes on the group of these elements: alcohol, tobacco and firearms. This organization is included in the Department of the Treasury. In addition, taxes on imports which is required to pay by customs, are administered by the U.S. Customs and Border Patrol, a part of the Department of Homeland Security.

With regard to tax administrations, there exist various types of local and state organizations with widely expansions. Not only state but also local area have to release tax administrations. In local situation, a local area can have tax administrations in common with its neighbors.

Particularly, tax administration is considered as vital sector. It can work effectively by ensuring high compliance by taxpayers and controlling administrative costs. A good performance of tax administration requires strong technical capacity including the administrative agency and also a well-designed tax. That administrative agency should have the qualifications such as being able to identify and evaluate the effects of tax policies, simplify the current tax system in case of necessary, or aware of new changes in regulations.

  1. Federal
  • Internal Revenue Service

The IRS administers all U.S. federal taxation on domestic activities, except those taxes administered by TTB. For example:

  • Processing federal tax returns (except TTB returns).
  • Collecting all taxes.
  • Publishing information about U.S. federal taxes, including forms, publications, and other materials. Taxpayers can pay tax in a National Office in Washington, DC or local offices. Taxpayers also generally file most types of tax returns by mail with these Service Centers, or file electronically.

  • Examination

Tax returns filed with the IRS can examine and adjust, called an IRS audit.

  • Published and private rulings

The IRS provides IRS Regulation to taxpayers, the regulations under the Internal Revenue Code are issued by the Department of Treasury.

  • Alcohol and Tobacco Tax and Trade Bureau

The Alcohol and Tobacco Tax Trade Bureau (TTB), a division of the Department of the Treasury, enforces federal excise tax laws related to alcohol, tobacco, and firearms.

  • Customs and Border Protection

U.S. Customs and Border Protection (CBP) collect customs duties and regulates international trade. CBP has authority to seize and dispose of cargo in the case of certain violations of customs rules.

  1. State administrations

Every state in the United States has different tax administration and follow rules of that state's law and regulations. The powers of the state taxing authorities vary widely. Most states enforce all state level taxes but not most local taxes. However, many states have unified local sales taxes.

State tax returns are filed separately with those tax administrations, not with the federal tax administrations. Each state has its own procedural rules.



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