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Federal Income Tax

The tax imposed by the U.S. government on the payable incomes of individuals, companies, trusts and estates is known as federal income tax. Corporate income taxes are to be paid on the gross profit, the difference between the whole receipts and total direct and indirect expenditures.

Federal income tax was imposed for the first time by the U.S. government in 1861 to finance the Civil War. A tax of 3 percent was levied on incomes above $600, which grew to 5 percent for incomes above $10,000. These rates were raised in 1864. A new income tax act was endorsed in the late 1800s. After the Civil War, income tax was cancelled in 1872.

In the present scenario, the revenues of the federal government mainly mount up from personal and corporate income taxes. It is income tax that forms the immensity of the taxes collected by the U.S. government.

In spite of the fact that the money paid as surplus has been taxed at the corporate level, it is taxed again in the hands of the investor at the personal level.
This is known as double taxation. The tax paid on the dividends by an individual is called dividend tax.

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