For example, in the United States, tax laws originate as bills in Congress. When passed by both the House of Representatives and the Senate, these bills go to the president for approval and signature to become laws. Like many bodies of law, tax codes are often organized into different sections. For example, the Internal Revenue Code is divided into the following 11 subtitles:
Subtitle A: Income TaxesSubtitle B: Estate and Gift TaxesSubtitle C: Employment TaxesSubtitle D: Miscellaneous Excise TaxesSubtitle E: Alcohol, Tobacco, and Certain Other Excise TaxesSubtitle F: Procedure and AdministrationSubtitle G: The Joint Committee on TaxationSubtitle H: Financing of Presidential Election CampaignsSubtitle I: Trust Fund CodeSubtitle J: Coal Industry Health BenefitsSubtitle K: Group Health Plan Requirements
Jurisdictions generally have some kind of revenue agency or department that is responsible for fairly enforcing the laws found in the tax code. In the United States, this agency is the Internal Revenue Service (IRS). Other countries have different names for their tax code enforcement agencies:
United Kingdom: Her Majesty’s Revenue and CustomsChina: State Taxation AdministrationCanada: Canada Revenue Agency
Regulations and Official Guidance
In the United States, the Internal Revenue Code—as the nation’s tax code—is the ultimate source of authority on all matters pertaining to federal taxation. However, while they’re not as authoritative as the tax code itself, other sources of tax authority can be helpful for taxpayers. For example, Treasury regulations are the Department of the Treasury’s official interpretation of various parts of the Internal Revenue Code. The IRS also publishes official guidance intended to help taxpayers understand tax laws and obligations.
Criticism of Tax Codes
Many people and organizations dislike paying taxes, and criticisms of tax codes are commonplace.
Complexity
It’s fairly common for tax codes to be criticized for their complexity and difficulty to understand. Even tax department employees sometimes have trouble understanding their own tax code correctly. For example, in 2017 the Office of the Auditor General of Canada tested agents working for the Canada Revenue Agency and found that they provided incorrect information almost 30% of the time. In the 1980s, the U.S. General Accounting Office ran a similar assessment of IRS telephone operators and found they gave incorrect responses 36% of the time. If a tax code is too complicated or difficult for a country’s own tax agents to explain correctly, critics may claim it’s unreasonable to expect the average taxpayer to understand it.
Unfairness
Others criticize tax codes for their perceived unfairness in terms of who pays the most in taxes. For example, the Internal Revenue Code is routinely criticized by politicians for benefiting wealthy Americans at the expense of the average citizen. This criticism is not unique to the United States tax code. In the United Kingdom, over 117,000 people signed a petition urging the prime minister to “stand up and fix the system” that consists of “tax breaks for corporates and wealthy individuals.”
Example of a Tax Code
A tax code is a unified set of laws that provide the statutory basis for all tax systems within a nation or other jurisdiction. For example, Title 26 of the United States code, known as the Internal Revenue Code, contains all of the United States’ federal tax laws and is therefore its tax code. It covers taxation related to income, employment, estates, gifts, sales, and more.
