Transcript TAX

TAX
• Money paid to the government for benefits or
public goods.
Principles of Taxation
1. People should pay
for benefits received.
2. People should pay
according to their
ability to pay. Higher
income earners pay
more.
Benefits Received
• Public Goods
• Government Services
Benefits Received Principle
• Those who benefit the
most from a public
good or service will
pay for it through
taxes.
• Example: Gas Tax
(paid by drivers)
which is used to
construct/repair
roads
Ability to Pay
• How much taxes would a single person owe to the government if
she earned $83,000?
• How much would a married couple earning $60,000 owe?
Do you think people should be
taxed more because they earn
more?
Explain?
What are the major types of
taxes?
Who has to pay them?
Personal Income Tax
• A percentage of
income earned.
• Federal and State
governments collect.
• Progressive at
Federal level.
• Sometimes
proportional at state
level.
• All wage earners pay.
Social Security (FICA)
• Federal Insurance
Contributions Act.
• Workers pay into it
while working and
receive from it when
retired.
• Many workers pay
this, some covered
by private pensions
do not.
Excise Tax
• Tax charged on
certain items such as
cigarettes, alcohol,
telephone service,
gasoline to generate
money for the
government.
Tariff Taxes
• Tax on foreign goods
imported into the US.
• Making foreign goods
more expense so
American goods can
compete.
Gift Tax
• Tax on money or
property gifts of more
than $13,000 in one
year.
• Over a lifetime a
person can give 3 ½
million dollars tax
free.