Federal taxes are those taxes which are imposed by the government of any state. These are also called as-you-go-taxes. As they work hand in hand with the progress of the person. For instance in U.S. the basic principle and law for income tax payers is that people should tax according to their "power to pay". People with same income do not mean that these people are able to pay the same amount of taxes as the expenditures of one may be more than the other.
Those with medical bills, mortgage expenses, or other allowable expenses can subtract these amounts as "itemized deduction" to reduce their taxable income. Similarly tax payers may deduct certain amount on their tax allowable as exemption. When calculating one's taxable income these exemptions and itemized deduction prevent the poor and show their ability to pay. In this manner nearly all the basic expenditures are deducted and then the taxable income is reckoned.
Those with high taxable income pay a large amount of their income in the taxes. This is calculated by a percentage amount known as "tax rate". Since those earning high incomes pay a huge amount of tax so the federal tax is considered as a progressive tax.
Sales and excise taxes are considered as regressive taxes. Since the tax rate is imposed on the income of one the poor pays a huge amount of his income in these taxes. Comparing federal taxes here, they are imposed on a "pay-as-you-go "system. That means as your income gets higher after deducting the exemptions and itemized deductions you start paying more taxes to the government.
Most employers must tax the employees from their paychecks and send the money to the fund of general treasury. Self employed and businessmen must pay their taxes in installments regularly. This tax payment during the year prevents the government from borrowing money from other organization. It also provides an easier way for the tax payer to pay the taxes.
To keep the collection cost down the internal revenue services expects all tax payers to comply with law voluntary. Normally the regular tax payer know how and what is the tax rate being levied on their income so they deduct that amount from their income and keep it in their accounts by the due date of the tax payment. Without this compliance of the tax payer it would cost the internal revenue services more for the collection of the taxes. To save these it is necessary for the tax payers to work hand in hand with them.
Until now you must have understood the difference between a normal tax and a federal tax. The advantage of federal tax system as explained before also that in this tax system the poor gets the benefit that normally the tax rate is levied on his whole income due to which he suffer from paying a huge amount of his income in the taxes, Whereas in the federal tax payment his all essential expenditures are considered before levying the tax rate.
