Introduction
Taxes are levied in the USA by the federal, state, and local governments. Each government imposes its own taxes. There are no shared taxes, although more than one government may exploit the major revenue sources. In addition, there is considerable shifting of money through shared expenditure programs from higher to lower levels of government. The federal government, most state governments, and some local governments impose income taxes. The most important revenue sources are income and payroll taxes at the federal level, sales and income taxes at the state level, and property taxes at the local level.
Total taxes in the USA in 1992 were 29.4 per cent of GDP, the lowest relative to GDP of all OECD countries other than Turkey and Australia and the same as Japan. Federal taxes (excluding social insurance contributions) were 11.1 per cent of GDP in 1992, falling from 12.0 per cent in 1975. State taxes were 5.5 per cent of GDP in 1992, rising from 5.1 per cent in 1975, and local taxes were 3.8 per cent of GDP in 1992, falling from 3.9 per cent in 1975. Federal and state social insurance contributions were 9.0 per cent of GDP in 1992, rising from 6.8 per cent of GDP in 1975. At the federal level, the personal income tax is the most important revenue source, comprising 8.0 per cent of GDP in 1992, rising from 7.7 per cent in 1975. Over this same period, the corporate income tax decreased from 2.6 per cent of GDP in 1975 to a low of 1.5 per cent in 1985 and 1986, increasing to 1.7 per cent in 1992. Unlike every other industrialized country, there is no broad-based consumption tax at the federal level (James & Roy 1987)...............
