Comparing Tax Systems: An Analysis of Australia and the United States

This report provides a comparative analysis of the tax laws in Australia and the United States, highlighting both similarities and differences. The comparison covers various aspects, including types of taxes such as income tax, company tax, and goods and services tax (GST). It examines the differences in tax brackets, noting the variance in tax rates and increments between the two countries. Tax collection procedures are also compared, detailing the roles of federal, state, and local governments in the US and the Pay As You Go (PAYG) system in Australia versus the self-assessment approach in the US, managed by the IRS. Finally, the report discusses tax penalties in both countries, emphasizing the seriousness with which tax-related offenses are treated, including potential criminal penalties for intentional failures like tax fraud. The report uses references to support its analysis of tax systems in both countries.

Similarities and
differences between
Australia and United
states tax law
Group assignment

Similarities – Types of taxes in both
countries
- Both countries have a number of similar taxes; these taxes includes:
 Income taxes
 Company Taxes
 Goods and services Taxes
 Luxury Car Taxes as referred in Australia but in the US referred to as
Luxury tax.
 Excise duty tax as referred to in Australia but in the US referred to as
Sin Tax.

Tax Brackets Between the two
countries differ
 Tax bracket can be defined as the range of income taxed at a given
rate.
 The tax rate between the two countries vary greatly with the united
states tax rates being higher as compared to Australia. The rage of
the tax rate increments with intervals of 5% starting at 10% and as
the income increases so does the tax rate. On the other hand, the tax
rate starts of at 0% whew the tax income is Nil then progresses to,
9.65% where the income rages between $18,201 - $37, 000. the
interval between the tax rates are not as uniform as the United \|
States tax rates as compared to the income.

Tax collection in both countries are
similar
 Both countries have the same tax collection procedure. Both US and
Australia receive most of there taxes from income taxes which are
collected by the federal government in both cases.
 For the United States Tax Laws the federal government collect 53% of
the tax revenues where the rest is shared between the state and the
local government. Where the states collects 26% and the local
government collects 21% of the taxes
 For Australia the federal government collects the Australian GST
revenue and then paid to the states via a determined formula by the
Commonwealth Grant Commission.

Tax collection Laws for tax payers in
both countries differ.
 In Australia income tax on wages has a system laid down by the law
for the collection of these taxes known as the Pay as you Go (PAYG)
which works by withholding taxes system.
 On the other hand, the United States tax payers are expected to pay
all taxes owed based on the self assessment tax returns as adjusted.
The IRS body is in charge of the body by providing time payment
plans and includes different options such as the interests, and
penalties. The IRS in the United States is responsible for most of the
collection of taxes activities.

Tax Penalties in both countries
 The tax laws in both countries provide provisions for penalties in
relation to tax related cases. The penalties in both countries vary
based on the type of failure the tax payer is associated with. For the
calculations of the penalties both countries fall under interests, others
being fixed amount while other penalties are based on other
measure.
 both countries tax laws take the penalties extremely serious so as to
uphold the tax system within there countries. Some penalties in the
country such as intentional failures such as tax fraud in both
countries are punishable in the form of a criminal penalty.

References
 Burnham, W., 2016. Introduction to the law and legal system of the United
States. West Academic Publishing.
 Clausing, K.A., 2016. The effect of profit shifting on the corporate tax base in
the United States and beyond.
 James, S., Sawyer, A. and Wallschutzky, I., 2015. Tax simplification: A review of
initiatives in Australia, New Zealand and the United Kingdom. eJournal of Tax
Research, 13(1), p.280.
 McGregor-Lowndes, M. and Williamson, A., 2018. Foundations in Australia:
Dimensions for international comparison. American Behavioral Scientist,
p.0002764218773495.
 Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’
view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075.
 Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall.