Tax policy decides both how much revenue the government collects and how the burden is distributed. Debate runs along two axes at once: the total level of taxation, and its distribution across income, wealth, and activity.
The federal system relies primarily on individual income taxes and payroll taxes, with corporate income, excise, estate, and tariff revenue making up smaller shares. State and local governments lean more heavily on sales and property taxes.
The federal income tax is progressive in structure, meaning higher brackets face higher marginal rates. Payroll taxes are flatter and capped, and sales taxes take a larger share of income from lower earners. Assessments of overall fairness depend heavily on which taxes are counted together.
Much of the code's complexity comes from deductions, credits, and exclusions, sometimes called tax expenditures. These function as spending delivered through the tax system and are worth a very large sum annually.