Federalism in U.S
Federalism can be defined as a constitutional division of the powers of a government between the central or national government and a set of various regions. In a federal government, the national and the regional government have some independence and share some powers over the citizens. The two governments do not owe legal existence to one another and may not dictate the structural organization, essential functions or the fiscal policies of each other (Milakovich and George 109)
Folsom and Rick contend that, in the United States, business taxes change constantly and business are subject to a wide range of taxes. Some of the taxes are imposed by the state, local government or the federal government. Some of the taxes are added to the price of the product or paid directly by business. Some of the taxes imposed by the federal government on businesses are exercise tax, corporate income tax, Medicare, social security and corporate income tax (Folsom and Rick 50).
Folsom and Rick note that the federal tax laws contain many provisions for either reducing or eliminating tax liability for corporations. Exercise taxes on sale of products are paid to both the state government and the federal government. The major exercise taxes in America include tobacco, gasoline and alcohol taxes. Wine is taxed at $ 1.07 per gallon, beer at $ 18 per barrel and recently the government has raised the tax on tobacco. There are also other obscure taxes paid to both governments such as recreational vehicles, coal, tires, production of destructive devices and machine guns (Folsom and Rick 50)
The federal and state governments also receive tax in the form of social security. Employees and employers contribute 6% of their income and Survivors and disability contribute about $ 80,000 of salaries and wages each year. Most federal states generate their income tax from property, personal income taxes and from sales. Business taxes vary from one state to another with some states imposing taxes on business incomes and inventories. Majority of the cities charge taxes on business and also offer tax breaks to companies that create jobs for the citizens (Folsom and Rick 50)
During the conception of U.S