U.S Tax Law: Overview & Basic Principles

Instructor: Shannon Battle

Shannon has taught middle school and college classes and has a law degree.

This lesson will explain what the U.S. tax system is. We'll discuss the five basic principles that guide the system and understand how these principles are used to make new tax laws.

The U.S. Tax System

When you were a child, you were provided food, a place to sleep, and clothes to wear. You probably never thought about how these things were paid for. Now you've grown up, your parents may not provide for you anymore, and you realize that these basic requirements cost money! Well, the government provides you with many services like police and military protection, roads and highways. Have you ever considered how they pay for it?

Our U.S. tax system is how the government raises money to provide these services. The U.S. tax system is a system of laws allowing the government to collect money from individuals and businesses to pay for the services it provides to the public. The Internal Revenue Service (IRS) is the agency that makes the rules and oversees the collection of taxes.

Do you remember the first paycheck you ever received? The amount was probably less than you imagined it would be. That was the IRS at work, taking taxes out of your earnings. When you go to the store and buy a shirt, the price tag may say $10.00, but you always pay more than that due to taxes. It is the U.S. tax system that determines how much money will go from your paycheck or your purchase to the government.

The Five Principles

The IRS uses five main principles to guide them in enforcing this system. These principles are (1) neutrality, (2) efficiency, (3) certainty and simplicity, (4) effectiveness and fairness, and (5) flexibility.

Summary of Basic Tax Principles
Summary of Basic Principles

As you can imagine, managing the U.S. tax system is a big job! Managing that many people and that much money requires everyone to be on the same page with how the IRS will tackle a job that big every single year.

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