Who taxes Internet income?

How do taxes in the United States compare with the taxes of European nations?

• I know the usual answer is that taxes in Europe are higher than in the US, but given the number of items we pay taxes on in the US, I wonder if that is true any more. For example, in the US we pay : Federal income taxes, some states require income tax too, property tax, taxes on utilities, taxes on petrol, taxes on cell phone service, taxes on other communications services (cable, stellite, internet), taxes on prescription medicine, and if you smoke or drink, taxes on booze and cigarettes. I might have enen left a few items out. So, how does that list compare with what the average European would pay?

• Answer:

  This is difficult to say, since you're really trying to compare apples and oranges. From the income tax standpoint, the US generally have lower tax brackets than their European counterparts. Also, some deductions that we have here in the US (such as deductions for mortgage interest and property taxes) does not have an equivalent deduction in Europe. For example, Canada (while it's not in Europe) does not have a deduction for mortgage interest. In most US states, you have to pay a sales tax on products you purchase. In Europe, they have VAT (value added tax) which is somewhat equivalent to a sales tax. The difference is that in the US, sales tax is collected from the end user, the customer buying the product. In Europe, VAT is collected in all stages of production. The supplier of raw materials has to collect VAT from the manufacturer. The manufacturer that turns the raw materials into a product for sale has to collect VAT from the wholesaler. The wholesaler that sells the product to the retailer has to collect VAT from the retailer. The retailer then collects VAT from the customer. So from beginning to end, a product can be taxed several times. There might be additional taxes that Europeans pay that Americans don't. For example, in the UK, you have to pay a tax (or license fee) for owning a television. In Germany, if you are a member of a church, you are assessed a church tax on your income, which can vary from 4% to 9% of your income. You also have to consider the cost of items. For example, since a greater percentage of oil is imported into Europe compared to the US, gasoline prices in Europe are much higher than in the US. Overall, I would say that generally, the taxes overall in the US are much lower than in Europe.