U.s. Federal Personal Income Tax System Changes

Federal income tax of Unite States has already been stepped over the stage of systemization and codification after more than one century's development. Justifiability of federal income tax on residents is controversial confined to the distribution principle on direct tax in the Constitution initially, and instruments identified of the Supreme Court on the issue also showed changes on different times. The federal income tax on residents was fully established until the Sixteenth Amendment to the Constitution approved. Federal income tax rates and the specific provisions change frequently throughout the whole development process according to the government's understanding on tax purposes. In order to achieve the role of social management, lots of special provisions, especially more and more tax incentives were taken into the tax code. Although these special provisions have a certain role in promoting social stability and safeguarding the rights and interests of low-income persons, however, the erosion on tax base is also expending with the gradual increase in tax incentives, and deviated from the direction of establishing a simplified tax system far approved by the tax reform movement. The formation of a parallel with the general income tax structure was done when the Alternative Minimum Tax (AMT) approved. AMT initiates the increasing negative impacts on American taxpayers especially the middle-class families with the defects that there is no inflation index on consolidated income tax return, and coupled the reason that the regulatory ease its expansion is sunset provision mostly. Moreover, many of the general provisions of tax and AMT have also resulted in fairness and efficiency issues. This paper reviews the development of Unite States federal income tax history comprehensively, and illustrates these provisions which result in the fairness and efficiency issues fully, which were assessed in the real trade-off under Unite States tax law and legal values'plights. Meanwhile, this paper discuss the orientation and ways forward on the development of Unite State federal income tax on the bases of tax reform trends in developed countries two decades nearly. Recommendations were provided in the end of this paper on reform and development of China's income tax drawing on U.S. federal income tax gains and losses.