USA constitutes of 3 hierarchical structure for tax purposes.    Federal State Local

At Federal level following taxes are imposed        Income Tax Capital Gains Tax Corporation Tax Estate Tax Excise Tax Gift Tax Payroll tax.

At the state and local level following taxes are imposed    Income Tax Sales Tax Property Tax

Income Tax – on the basis of Constitutional limitations Income tax is imposed by both federal and state level governments. The charge is on income from whatever source it may be. Other concepts of exemption, deduction, assessment are similar to that of India. One unique feature of assessment in USA is the concept of family assessment. Payroll Tax – the payroll taxes are levied on the employees but paid by the employer. The following taxes come within the ambit of payroll taxes. With – holding tax Medicare taxes Social security taxes

Estate & Gift Tax – Estate taxes are levied on the transfer of estate at the time of the death of the person. To fill in the gap where a person may transfer his property while he is living Gift Tax is there. Gift Tax is imposed when a person transfers his property without consideration when he is alive. Excise Tax – Excise Tax is levied on diesel fuel, gasoline, cigarettes, wine and liquor. There is a tariff list similar to India, for computation of excise tax. Corporation Tax – Corporation Tax is levied only on those entities which come under the definition of corporation. This definition includes foreign corporations also. The un-

incorporated bodies are not included which is in sharp distinction to the position we have in UK. Capital Gains Tax – the Capital Gains Tax is levied on the transfer of capital assets. The unique feature in US and all the developed countries is that it is very low or negative in several cases. The rate usually ranges from 0-15%. Sales Tax – USA still adopts the old method of taxing sales of goods i.e. Sales Tax. It is a tax which is levied o last point sale of the commodity. But this system is defective, because once pilferage starts then it is difficult to contain. Property Tax – It is levied by the local government on the assessed value of the property. Usually the rate of taxes ranges from 0.2 – 4%.

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