Taxation in the Federated States is a complex system which may involve payment to at least four different levels of government and many methods of taxation. Federated States taxation includes local government, possibly including one or more of municipal, township, borough, or oblast governments. It also includes regional entities such as school, health, and utility, and transit districts as well as including state and federal government.
The taxation structure in the Federated States can be seen as the reverse of that in the United States. The bulk of tax responsibility of each citizen is to the lowest level of government (in most cases, the city or township). Higher levels of government rely more on lower levels of government than on individual citizens for tax revenue. The Federal government receives the lowest percentage of total tax revenue in the Federated States, because most government functions, such as law enforcement, education, and health care, are the responsibilities of states, boroughs, and cities.
Federal Taxation Edit
The Federal Government primarily obtains revenue from taxation on states. According to the forthcoming Tax Code, Twenty per-cent of State Revenue is taxed. Federal taxes are rarely imposed directly on individuals or even businesses and corporations. One example of this may be a surcharge on ticket prices on Gentoo Airways. Another may be health care premiums paid by Federation citizens living off-continent.
State Taxation Edit
Unlike the Federal government, which normally does not tax citizens directly, states will have a tremendous power to tax citizens and businesses. This is because most services will be provided by state governments.
Payroll Taxes Edit
Under the Federation constitution, personal income tax is prohibited. However, this does not prevent states from imposing payroll taxes on employers equal to ten per-cent of an employee's wage. In this model, the employer of an employee who earns the minimum wage of $14.50 per hour would be taxed $1.45 per hour on top of the employee's wage. This tax may not be deducted from the employee's wage. It remains entirely the responsibility of the employer.
Payroll Deductions Edit
The state may deduct health care premiums from an employee's wage or salary. Social Welfare premiums may also be deducted. These are not technically income taxes because revenues from these sources are used for specific programs and do not contribute to the general revenue fund.
Corporate Income Tax Edit
Businesses and State Corporations will pay income taxes to the State. A self-employed person is considered to be a business and thus subject to corporate income tax.
Sales Taxes Edit
States will have the power to set sales taxes. Under the Federation constitution, food and prescription medication may not be taxed. States may legislate other exceptions, such as infant supplies. Under the forthcoming Tax Code, sales taxes will be required to be progressive, as opposed to regressive. This means that those with higher incomes are to bear a higher tax burden than those with lower incomes. This is achieved by a graduated sales tax. Items valued under $100 may be taxed at a minimum percentage, while items valued at over $10,000 may be taxed at a maximum percentage, with percentage steps based on value in between. Every location in a particular state must have the same sales tax rate. Boroughs and municipalities will be entitled to a percentage of total state sales tax revenue, which usually will simply offset taxes paid to the state.
Taxes from Boroughs Edit
States may tax boroughs in the same fashion that the Federal government taxes states.
Borough and Oblast Taxation Edit
Borough and oblast revenue will come from user fees and taxes on municipalities. In unincorporated areas, taxation may come from the same sources as township and municipal revenue. Revenue from monthly passes for public transportation usually goes to boroughs, since they generally provide these services.
Municipal Taxation Edit
Since all buildings are owned by municipal governments, rents paid by those who occupy them are the single most important source of revenue that exists. Thus, paying rent is a form of taxation. In privately-owned sections of buildings and the rare buildings that are entirely privately owned, municipalities can impose property taxes as well. These revenues typically pay for most services at all levels of government, since the cities are taxed by the borough, which is taxed by the state, which is taxed by the Federal government. Other municipal taxes include taxes on alcohol, marijuana, and tobacco. Casino, hotel, and brothel revenues also contribute heavily to municipal taxation.
Personal Responsibility Edit
Taxation is designed to be as invisible to the individual as possible. The average worker may have rent, food and transportation passes, and health and social welfare premiums deducted from each paycheck. Generally, this will mean that most people will receive a small portion of the income actually earned. However, it will also mean that every paycheck consists of discretionary income.