Efficient tax system is one of the basis of the efficient economy of the country as a whole, that is why tax transformation is one of the priorities of U.S. economic policy, especially due to the growing global competition and the need for special measures to overcome the financial crisis at the end of the first decade of XXI century. These transformations are called to stimulate economic growth, innovative activity, labor motivation, improving the social protection of population in the USA.
By the beginning of the XXI century in the United States there was a need to review the current tax policies as a result of the exhaustion of its stimulating potential. The major areas that required correction were considered: -the unreasonably high rates of federal taxes, – a problem of leveling of income and economic equality between different segments of the population; high capital gains taxes; high inheritance taxes; complexity of the U.S. tax code.
It was assumed that these problems could be solved by developing and implementing the new long-term tax program that would include ensuring the neutrality of taxation, elimination of inefficient allocation of productive resources caused by the tax factor, improving the distribution function of the tax system, reduction of the limit and minimum rates of income tax for individuals, ensuring the growth of GNP as a result of tax incentives in employment and production, achievement of growth of the investmant attractiveness of the economy in a global scale.
Low taxes for all levels of population were introduced in 2001by the President George W. Bush. He said that his Government was prepared to reduce income taxes for people with different income levels. Then there was the country’s budget surplus – 1,25% of GDP, and the gross product grew steadily. (CBO, 2004)
However, from the beginning of the crisis and the fall in GDP by 2,4% for the year 2009 there was a question about raising taxes. The Act on the economic recovery, the latest version of which was adopted in February 2010, had a mortgage of 288 billion dollars in compensation of tax decrease until the end of 2010, that is to the end of the term of the Bush tax holiday. (CBO, 2010)
Thus, Mr. Obama due to changes in economic conditions in the country had to change the tax policy , and so he came up with tax reforms for the United States for the following years. Thus, the new tax package includes:
– introduction of a tax deduction up to $ 400 per year per taxpayer and $ 800 per year per family;
– the introduction of the tax deduction of up to 10% of the purchase price of real estate of up to 8 thousand dollars in its initial acquisition;
– the application of additional depreciation rates ;
– full cancellation of capital spending by small businesses, and increase the period of the transfer of net operating losses for small businesses;
– tax reductions for companies investing in the energy sector;
– raise in the taxes for the wealthiest Americans, the abolition of benefits for wealthy families;
– the abolition of benefits for corporations that carry production from the U.S..
As a result, according to calculations of Democrats, net income from taxation of the federal budget should be increased for the period from 2011 to 2019 up to 86.5 billion dollars, 60.1 billion dollars the state will receive by reducing the opportunities for tax deductions on income of subsidiaries of American companies abroad, and $ 43 billion – after the changes to the regulations on tax credits. Also it is planned to change the system of levying income dividends: the base rate was increased from 15 to 17%, but with significant investments in the U.S. economy investors are given tax incentives.
It is important, that the tax changes affect all the Americans. The most important point of these reforms is the decision that in 2011 people with incomes of more than 200 thousand dollars will be deprived of tax benefits which they enjoyed for 10 years (according to G.Bush tax plan). The President Obama explained that now the budget can not afford to cover these costs, it will create an additional burden on fin plan of $ 700 billion. Such citizens, Obama said, form only 3% of the population, and the high returns can help to rebuild the country.
Tax benefits for citizens with low and middle income, nominated by the president, are preserved. Those who earn less than 8,000 a year, traditionally exempt from taxes, although this is a very small proportion of the population, so there is loss of the budget will be minimal. For those who receive more income, the tax rate will be up to 10-15%, which will also include other taxes depending on each case.
For example, a single person with gross income of 40K will pay:
$40,000 gross income – $5,700 standard deduction – $3,650 personal exemption = $30,650 taxable income
$8,350 × 10% = $835.00
($30,650 – $8,350) = $22,300.00 * 15% = $3,345.00
The total income tax will be $4,180.00 (10.45% of the effective tax)
Despite the protests of the population and opponents of President Obama, these activities may give a positive effect in the medium term, but this may be only the first step towards further reform of the tax system of the United States and its correlation with the new economic and social challenges of our time. According to forecasts, in 2011 in response to government measures to overcome the recession, will begin rapid growth of budget revenues of the federal government.