A corporation is an organization a group of people or a company, authorized to act as a single entity and recognized as such in law. Early incorporated entities were established by charter. Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are divided by the law of the jurisdiction where they are chartered into two kinds: by whether they can issue stock or not, or by whether they are formed to make a profit or not. Corporations can be divided by the number of owners: corporation corporation sole; the subject of this article is a corporation aggregate. A corporation sole is a legal entity consisting of a single incorporated office, occupied by a single natural person. Where local law distinguishes corporations by the ability to issue stock, corporations allowed to do so are referred to as "stock corporations", ownership of the corporation is through stock, owners of stock are referred to as "stockholders" or "shareholders".
Corporations not allowed to issue stock are referred to as "non-stock" corporations. Corporations chartered in regions where they are distinguished by whether they are allowed to be for profit or not are referred to as "for profit" and "not-for-profit" corporations, respectively. There is some overlap between stock/non-stock and for-profit/not-for-profit in that not-for-profit corporations are always non-stock as well. A for-profit corporation is always a stock corporation, but some for-profit corporations may choose to be non-stock. To simplify the explanation, whenever "Stockholder" or "shareholder" is used in the rest of this article to refer to a stock corporation, it is presumed to mean the same as "member" for a non-profit corporation or for a profit, non-stock corporation. Registered corporations have legal personality and their shares are owned by shareholders whose liability is limited to their investment. Shareholders do not actively manage a corporation. In most circumstances, a shareholder may serve as a director or officer of a corporation.
In American English, the word corporation is most used to describe large business corporations. In British English and in the Commonwealth countries, the term company is more used to describe the same sort of entity while the word corporation encompasses all incorporated entities. In American English, the word company can include entities such as partnerships that would not be referred to as companies in British English as they are not a separate legal entity. Late in the 19th century, a new form of company having the limited liability protections of a corporation, the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became attractive as an alternative for corporations not needing to issue stock. In Germany, the organization was referred to as Gesellschaft mit beschränkter Haftung or GmbH. In the last quarter of the 20th Century this new form of non-corporate organization became available in the United States and other countries, was known as the limited liability company or LLC.
Since the GmbH and LLC forms of organization are technically not corporations, they will not be discussed in this article. The word "corporation" derives from corpus, the Latin word for body, or a "body of people". By the time of Justinian, Roman law recognized a range of corporate entities under the names universitas, corpus or collegium; these included the state itself and such private associations as sponsors of a religious cult, burial clubs, political groups, guilds of craftsmen or traders. Such bodies had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general, to perform legal acts through representatives. Private associations were granted designated liberties by the emperor. Entities which carried on business and were the subjects of legal rights were found in ancient Rome, the Maurya Empire in ancient India. In medieval Europe, churches became incorporated, as did local governments, such as the Pope and the City of London Corporation.
The point was that the incorporation would survive longer than the lives of any particular member, existing in perpetuity. The alleged oldest commercial corporation in the world, the Stora Kopparberg mining community in Falun, obtained a charter from King Magnus Eriksson in 1347. In medieval times, traders would do business through common law constructs, such as partnerships. Whenever people acted together with a view to profit, the law deemed. Early guilds and livery companies were often involved in the regulation of competition between traders. Dutch and English chartered companies, such as the Dutch East India Company and the Hudson's Bay Company, were created to lead the colonial ventures of European nations in the 17th century. Acting under a charter sanctioned by the Dutch government, the Dutch East India Company defeated Portuguese forces and established itself in the Moluccan Islands in order to profit from the European demand for spices. Investors in the VOC were issued paper certificates as proof of share ownership, were able to trade their shares on the original Amsterdam
Revenue Act of 1924
The United States Revenue Act of 1924 known as the Mellon tax bill cut federal tax rates and established the U. S. Board of Tax Appeals, renamed the United States Tax Court in 1942; the bill was named after U. S. Secretary of the Treasury Andrew Mellon; the Revenue Act was applicable to incomes for 1924. The bottom rate, on income under $4,000, fell from 1.5% to 1.125%. A parallel act, the Indian Citizenship Act of 1924, granted all non-citizen resident Indians citizenship, thus the Revenue Act declared that there were no longer any "Indians, not taxed" to be not counted for purposes of United States Congressional apportionment. President Calvin Coolidge signed the bill into law. Both a normal Tax and a surtax were levied against the net income of individuals, as shown in the following table: Exemption of $1,000 for single filers and $2,500 for married couples and heads of family. A $400 exemption for each dependent under 18
Taxation in the United States
The United States of America has separate federal and local governments with taxes imposed at each of these levels. Taxes are levied on income, property, capital gains, imports and gifts, as well as various fees. In 2010, taxes collected by federal and municipal governments amounted to 24.8% of GDP. In the OECD, only Chile and Mexico are taxed less as a share of their GDP. However, taxes fall much more on labor income than on capital income. Divergent taxes and subsidies for different forms of income and spending can constitute a form of indirect taxation of some activities over others. For example, individual spending on higher education can be said to be "taxed" at a high rate, compared to other forms of personal expenditure which are formally recognized as investments. Taxes are imposed on net income of individuals and corporations by the federal, most state, some local governments. Citizens and residents are allowed a credit for foreign taxes. Income subject to tax is determined under tax accounting rules, not financial accounting principles, includes all income from whatever source.
Most business expenses reduce taxable income. Individuals are permitted to reduce taxable income by personal allowances and certain non-business expenses, including home mortgage interest and local taxes, charitable contributions, medical and certain other expenses incurred above certain percentages of income. State rules for determining taxable income differ from federal rules. Federal marginal tax rates vary from 10% to 39.6% of taxable income. State and local tax rates vary by jurisdiction, from 0% to 13.30% of income, many are graduated. State taxes are treated as a deductible expense for federal tax computation, although the 2017 tax law imposed a $10,000 limit on the state and local tax deduction, which raised the effective tax rate on medium and high earners in high tax states. Prior to the SALT deduction limit, the average deduction exceeded $10,000 in most of the Midwest, exceeded $11,000 in most of the Northeastern United States, as well as California and Oregon; the states impacted the most by the limit were California.
The United States is one of two countries in the world that taxes its non-resident citizens on worldwide income, in the same manner and rates as residents. The U. S. Supreme Court upheld the constitutionality of imposition of such a tax in the case of Cook v. Tait. Payroll taxes are imposed by the federal and all state governments; these include Social Security and Medicare taxes imposed on both employers and employees, at a combined rate of 15.3%. Social Security tax applies only to the first $106,800 of wages in 2009 through 2011. However, benefits are only accrued on the first $106,800 of wages. Employers must withhold income taxes on wages. An unemployment tax and certain other levies apply to employers. Payroll taxes have increased as a share of federal revenue since the 1950s, while corporate income taxes have fallen as a share of revenue.. Property taxes are imposed by most local governments and many special purpose authorities based on the fair market value of property. School and other authorities are separately governed, impose separate taxes.
Property tax is imposed only on realty, though some jurisdictions tax some forms of business property. Property tax rules and rates vary with annual median rates ranging from 0.2% to 1.9% of a property's value depending on the state. Sales taxes are imposed by most states and some localities on the price at retail sale of many goods and some services. Sales tax rates vary among jurisdictions, from 0% to 16%, may vary within a jurisdiction based on the particular goods or services taxed. Sales tax is collected by the seller at the time of sale, or remitted as use tax by buyers of taxable items who did not pay sales tax; the United States imposes tariffs or customs duties on the import of many types of goods from many jurisdictions. These tariffs or duties must be paid before the goods can be imported. Rates of duty vary from 0 % based on the particular goods and country of origin. Estate and gift taxes are imposed by the federal and some state governments on the transfer of property inheritance, by will, or by lifetime donation.
Similar to federal income taxes, federal estate and gift taxes are imposed on worldwide property of citizens and residents and allow a credit for foreign taxes. The U. S. has an assortment of federal, state and special-purpose governmental jurisdictions. Each imposes taxes to or fund its operations; these taxes may be imposed on the same income, property or activity without offset of one tax against another. The types of tax imposed at each level of government vary, in part due to constitutional restrictions. Income taxes are imposed at most state levels. Taxes on property are imposed only at the local level, although there may be multiple local jurisdictions that tax the same property. Other excise taxes are imposed by the federal and some state governments. Sales taxes are imposed by many local governments. Customs duties or tariffs are only imposed by the federal government. A wide variety of user fees or license fees are imposed. A federal wealth tax would be required by the U. S. Constitution to be distributed to the States according to their populations, as this type of tax is considered a direct tax.
State and local government property taxes are w
Revenue Act of 1913
The Revenue Act of 1913 known as the Underwood Tariff or the Underwood-Simmons Act, re-established a federal income tax in the United States and lowered tariff rates. The act was sponsored by Representative Oscar Underwood, passed by the 63rd United States Congress, signed into law by President Woodrow Wilson. Wilson and other members of the Democratic Party had long seen high tariffs as equivalent to unfair taxes on consumers, tariff reduction was President Wilson's first priority upon taking office. Following the ratification of the Sixteenth Amendment in 1913, Democratic leaders agreed to seek passage of a major bill that would lower tariffs and implement an income tax. Underwood shepherded the revenue bill through the House of Representatives, but the bill won approval in the United States Senate only after extensive lobbying by the Wilson administration. Wilson signed the bill into law on October 3, 1913; the Revenue Act of 1913 lowered average tariff rates from 40 percent to 26 percent.
It established a one percent tax on income above $3,000 per year. A separate provision established a corporate tax of one percent, superseding a previous tax that had only applied to corporations with net incomes greater than $5,000 per year. Though a Republican-controlled Congress would raise tariff rates, the Revenue Act of 1913 marked an important shift in federal revenue policy, as government revenue would rely on income taxes rather than tariff duties. Democrats had long seen high tariff rates as equivalent to unfair taxes on consumers, tariff reduction was President Wilson's first priority upon taking office, he argued that the system of high tariffs "cuts us off from our proper part in the commerce of the world, violates the just principles of taxation, makes the government a facile instrument in the hands of private interests." While most Democrats were united behind a decrease in tariff rates, most Republicans held that high tariff rates were useful for protecting domestic manufacturing and factory workers against foreign competition.
Shortly before Wilson took office, the Sixteenth Amendment, proposed by Congress in 1909 during a debate over tariff legislation, was ratified by the requisite number of states. Following the ratification of the Sixteenth Amendment, Democratic leaders agreed to attach an income tax provision to their tariff reduction bill to make up for lost revenue, to shift the burden of funding the government towards the high earners that would be subject to the income tax. By late May 1913, House Majority Leader Oscar Underwood had passed a bill in the House that cut the average tariff rate by 10 percent. Underwood's bill, which represented the largest downward revision of the tariff since the Civil War, aggressively cut rates for raw materials, goods deemed to be "necessities," and products produced domestically by trusts, but it retained higher tariff rates for luxury goods; the bill instituted a tax on personal income above $4,000. Passage of Underwood's tariff bill in the Senate would prove more difficult than in the House because some Southern and Western Democrats favored the continued protection of the wool and sugar industries, because Democrats had a narrower majority in that chamber.
Seeking to marshal support for the tariff bill, Wilson met extensively with Democratic senators and appealed directly to the people through the press. After weeks of hearings and debate and Secretary of State William Jennings Bryan managed to unite Senate Democrats behind the bill; the Senate voted 44 to 37 in favor of the bill, with only one Democrat voting against it and only one Republican, progressive leader Robert M. La Follette Sr. voting for it. Wilson signed the Revenue Act of 1913 into law on October 3, 1913; the Revenue Act of 1913 reduced the average import tariff rates from 40 percent to 26 percent. The Act established the lowest rates since the Walker Tariff of 1857. Most schedules were a percentage of the value of the item; the duty on woolens went from 56% to 18.5%. Steel rails, raw wool, iron ore, agricultural implements now had zero rates; the reciprocity program wanted by the Republicans was eliminated. Congress rejected proposals for a tariff board to fix rates scientifically, but it set up a study commission.
The Underwood-Simmons measure vastly increased the free list, adding woolens, steel, farm machinery, many raw materials and foodstuffs. The average rate was 26%; the Revenue Act of 1913 restored a federal income tax for the first time since 1872. The federal government had adopted an income tax in the Wilson–Gorman Tariff Act, but that tax had been struck down by the Supreme Court in the case of Pollock v. Farmers' Loan & Trust Co; the Revenue Act of 1913 imposed a one percent tax on incomes above $3,000, with a top tax rate of six percent on those earning more than $500,000 per year. Three percent of the population was subject to the income tax; the bill included a one percent tax on the net income of all corporations, superseding a previous federal tax that had only applied to corporate net incomes above $5,000. The Supreme Court upheld the constitutionality of the income tax in the cases of Brushaber v. Union Pacific Railroad Co. and Stanton v. Baltic Mining Co. A normal income tax and an additional tax were levied against the net income of individuals, as shown in the following table: There was an exemption of $3,000 for single filers and $4,000 for married couples.
Therefore, the 1% bottom marginal rate applied only to the first $17,000 of income for single filers or the first $16,000 ($352,300 in
An excise or excise tax is any duty on manufactured goods, levied at the moment of manufacture, rather than at sale. Excises are associated with customs duties. Although sometimes referred to as a tax, excise is a duty. An excise is considered an indirect tax, meaning that the producer or seller who pays the levy to the government is expected to try to recover their loss by raising the price paid by the eventual buyer of the goods. Excises are imposed in addition to an indirect tax such as a sales tax or value-added tax. An excise is distinguished from a sales tax or VAT in three ways: an excise is a per unit tax, costing a specific amount for a volume or unit of the item purchased, whereas a sales tax or value-added tax is an ad valorem tax and proportional to the price of the goods, an excise applies to a narrow range of products, an excise is heavier, accounting for a higher fraction of the retail price of the targeted products. Typical examples of excise duties are taxes on gasoline and other fuels, taxes on tobacco and alcohol.
Excise is derived from the Dutch accijns, presumed to come from the Latin accensare, meaning "to tax". Excise was introduced in the mid 17th century under the Puritan regime. In the British Isles, upon the Restoration of the Monarchy, many of the Puritan social restrictions were overturned, but excise was re-introduced, under the Tenures Abolition Act 1660, in lieu of rent, for tenancies of royally-owned land which had not become socage. Although the affected tenancies were limited in number, the excise was levied more generally. Excise duties or taxes continued to serve political as well as financial ends. Public safety and health, public morals, environmental protection, national defense are all rationales for the imposition of an excise. In defense of excises on strong drink, Adam Smith wrote: "It has for some time past been the policy of Great Britain to discourage the consumption of spirituous liquors, on account of their supposed tendency to ruin the health and to corrupt the morals of the common people."
Samuel Johnson was less flattering in his 1755 dictionary: EXCI'SE. n.s.... A hateful tax levied upon commodities, adjudged not by the common judges of property, but wretches hired by those to whom excise is paid; as a deterrent, excise is directed towards three broad categories of harm: health risks from abusing toxic substances. Tobacco tax revenues, for example, might be spent on government anti-smoking campaigns, or healthcare for cancer, heart disease, vascular disease, lung disease, so on. In some countries, excise is levied on some goods for purely punitive reasons. Many US states impose excise on illegal substances; these are the three main targets of excise taxation in most countries around the world. They are everyday items of mass usage; the first two are considered to be legal drugs, which are a cause of many illnesses, which are used by large swathes of the population, both being recognized as addictive. Gasoline, as well as diesel and certain other fuels, have excise tax imposed on them because they pollute the environment and to raise funds to support the transportation infrastructure.
Some U. S. states tax transactions involving illegal drugs. Gambling licences are subject to excise in many countries today. In 18th-century England, for a brief time in British North America, gambling itself was for a time subject to taxation, in the form of stamp duty, whereby a revenue stamp had to be placed on the ace of spades in every pack of cards to demonstrate that the duty had been paid. Since stamp duty was only meant to be applied to documents, the fact that dice were subject to stamp duty suggests that its implementation to cards and dice can be viewed as a type of excise duty on gambling. Profits of bookmakers are subject to General Betting Duty in the United Kingdom. Prostitution has been proposed to bear excise tax in separate bills in the Canadian Parliament, in the Nevada Legislature – proposed wordings: "5.5 Implementation of an excise tax on prostitution, the brothel is taxed and
Tax Reform Act of 1986
The U. S. Congress passed the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters. Referred to as the second of the two "Reagan tax cuts", the bill was officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate; the Tax Reform Act of 1986 was given impetus by a detailed tax-simplification proposal from President Reagan's Treasury Department, was designed to be tax-revenue neutral because Reagan stated that he would veto any bill, not. Revenue neutrality was achieved by offsetting tax cuts for individuals by eliminating $60 billion annually in tax loopholes and shifting $24 billion of the tax burden from individuals to corporations by eliminating the investment tax credit, slowing depreciation of assets, enacting a stiff alternative minimum tax on corporations; the top tax rate for individuals for tax year 1987 was lowered from 50% to 38.5%. Many lower level tax brackets were consolidated, the upper income level of the bottom rate was increased from $5,720/year to $29,750/year.
This package consolidated tax brackets from fifteen levels of income to four levels of income. The standard deduction, personal exemption, earned income credit were expanded, resulting in the removal of six million poor Americans from the income tax roll and a reduction of income tax liability across all income levels; the higher standard deduction simplified the preparation of tax returns for many individuals. For tax year 1987, the Act provided a graduated rate structure of 11%/15%/28%/35%/38.5%. Beginning with tax year 1988, the Act provided a nominal rate structure of 15%/28%/33%. However, beginning with 1988, taxpayers having taxable income higher than a certain level were taxed at an effective rate of about 28%; this was jettisoned in the Omnibus Budget Reconciliation Act of 1990, otherwise known as the "Bush tax increase", which violated his Taxpayer Protection Pledge. The Act increased incentives favoring investment in owner-occupied housing relative to rental housing. Prior to the Act, all personal interest was deductible.
Subsequently, only home mortgage interest was deductible, including interest on home equity loans. The Act phased out many investment incentives for rental housing, through extending the depreciation period of rental property to 27.5 years from 15-19 years. It discouraged real estate investing by eliminating the deduction for passive losses. To the extent that low-income people may be more to live in rental housing than in owner-occupied housing, this provision of the Act could have had the tendency to decrease the new supply of housing accessible to low-income people; the Low-Income Housing Tax Credit was added to the Act to provide some balance and encourage investment in multifamily housing for the poor. Moreover, interest on consumer loans such as credit card debt was no longer deductible. An existing provision in the tax code, called Income Averaging, which reduced taxes for those only making a much higher salary than before, was eliminated; the Act, increased the personal exemption and standard deduction.
The Individual Retirement Account deduction was restricted. The IRA had been created as part of the Employee Retirement Income Security Act of 1974, where employees not covered by a pension plan could contribute the lesser of $1500 or 15% of earned income; the Economic Recovery Tax Act of 1981 removed the pension plan clause and raised the contribution limit to the lesser of $2000 or 100% of earned income. The 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes. Non-deductible contributions were allowed. Depreciation deductions were curtailed. Prior to ERTA, depreciation was based on "useful life" calculations provided by the Treasury Department. ERTA set up the "accelerated cost recovery system"; this set up a series of useful lives based on three years for technical equipment, five years for non-technical office equipment, ten years for industrial equipment, fifteen years for real property.
TRA86 lengthened these lives, lengthened them further for taxpayers covered by the alternative minimum tax. These latter, longer lives approximate "economic depreciation," a concept economists have used to determine the actual life of an asset relative to its economic value. Defined contribution pension contributions were curtailed; the law prior to TRA86 was that DC pension limits were the lesser of 25% of compensation or $30,000. This could be accomplished by any combination of elective deferrals and profit sharing contributions. TRA86 introduced an elective deferral limit of $7000, indexed to inflation. Since the profit sharing percentage must be uniform for all employees, this had the intended result of making more equitable contributions to 401's and other types of DC pension plans; the 1986 Tax Reform Act introduced the General Nondiscrimination rules which applied to qualified pension plans and 403 plans that for private sector employers. It did not allow such pension plans to discriminate in favor of compensated employees.
A compensated employee for the purposes of testing a plan's compliance for the 2006 plan year is any employee whose compensation exceeded $95,000 in the 2005 plan year. Therefore, all new hires are by definition nonhighly compensated employees. A plan could not give benefits or contributions on a more favorable basis for
United States Statutes at Large
The United States Statutes at Large referred to as the Statutes at Large and abbreviated Stat. are an official record of Acts of Congress and concurrent resolutions passed by the United States Congress. Each act and resolution of Congress is published as a slip law, classified as either public law or private law, designated and numbered accordingly. At the end of a Congressional session, the statutes enacted during that session are compiled into bound books, known as "session law" publications; the session law publication for U. S. Federal statutes is called the United States Statutes at Large. In that publication, the public laws and private laws are numbered and organized in chronological order. U. S. Federal statutes are published in a three-part process, consisting of slip laws, session laws, codification. Large portions of public laws are enacted as amendments to the United States Code. Once enacted into law, an Act will be published in the Statutes at Large and will add to, modify, or delete some part of the United States Code.
Provisions of a public law that contain only enacting clauses, effective dates, similar matters are not codified. Private laws are not codified; some portions of the United States Code have been enacted as positive law and other portions have not been so enacted. In case of a conflict between the text of the Statutes at Large and the text of a provision of the United States Code that has not been enacted as positive law, the text of the Statutes at Large takes precedence. Publication of the United States Statutes at Large began in 1845 by the private firm of Little and Company under authority of a joint resolution of Congress. During Little and Company's time as publisher, Richard Peters, George Minot, George P. Sanger served as editors. In 1874, Congress transferred the authority to publish the Statutes at Large to the Government Printing Office under the direction of the Secretary of State. Pub. L. 80–278, 61 Stat. 633, was enacted July 30, 1947 and directed the Secretary of State to compile, edit and publish the Statutes at Large.
Pub. L. 81–821, 64 Stat. 980, was enacted September 23, 1950 and directed the Administrator of General Services to compile, edit and publish the Statutes at Large. Since 1985 the Statutes at Large have been prepared and published by the Office of the Federal Register of the National Archives and Records Administration; until 1948, all treaties and international agreements approved by the United States Senate were published in the set, but these now appear in a publication titled United States Treaties and Other International Agreements, abbreviated U. S. T. In addition, the Statutes at Large includes the text of the Declaration of Independence, Articles of Confederation, the Constitution, amendments to the Constitution, treaties with Indians and foreign nations, presidential proclamations. Sometimes large or long Acts of Congress are published as their own "appendix" volume of the Statutes at Large. For example, the Internal Revenue Code of 1954 was published as volume 68A of the Statutes at Large.
Revised Statutes of the United States Procedures of the United States Congress Enrolled Bill Federal Register United States Reports California Statutes Laws of Florida Laws of Illinois Laws of New York Laws of Pennsylvania This article incorporates public domain material from websites or documents of the U. S. Government Publishing Office. How Our Laws Are Made, by the Parliamentarian of the House of Representatives. Volumes 1 to 18 of the Statutes at Large made available by the Library of Congress Volumes 1 to 64 of the Statutes at Large made available by the Congressional Data Coalition via LEGISWORKS.org Volumes 65 to 125 of the Statutes at Large made available by the GPO and the Library of Congress via FDsys Sortable by Bills Enacted into Laws, Concurrent Resolutions, Popular Names, Presidential Proclamations, or Public Laws. Volumes 1–124 of the Statutes at Large made available by the Constitution Society Public and private laws from 104th Congress to present from the Government Printing Office, in slip law format with Statutes at Large page references Early United States Statutes includes Volumes 1 to 44 of the Statutes at Large in DjVu and PDF format, along with rudimentary OCR of the text.
United States Statutes and the United States Code: Historical Outlines, Lists and Sources from the Law Librarians' Society of Washington, DC Second Edition of the Revised Statutes of the United States