Author(s): CA Deepti, CS Monika Goel
The growth and advancement of a nation largely depend on the structure of its government's taxation policy. A sound taxation policy is imperative for the country’s public finance, as tax significantly contributes to sustainable development. It is the responsibility of the government of every nation to provide adequate resources and facilities to its citizens, and in return for this, the citizens of the country pay taxes to the government. Every country has a defined set of rules and laws for collecting taxes from the public, though every country has different tax collection methods and a different taxpayer base. In the last two decades, the taxation system around the world has undergone several reforms, which have resulted in increased transparency and voluntary compliance by the taxpayers, thereby increasing revenue generation (TAX POLICY FOR SUSTAINABLE DEVELOPMENT IN ASIA AND THE PACIFIC, 2018). This study compares the tax structure, tax collection, and tax base of India and the United States and examines the reasons for differences in the tax structure and collection. The study also examines the tax policy changes that defined the tax growth in India and the United States during the last 15 years. Possible reasons behind low tax base and low tax returns in a developing country like India, when compared to a developed country like the United States, are also examined to understand how a developing country can improve its tax system to enhance its tax base and collection.