Transcript taxes.ppt
It’s Inevitable… TAXES! Grade 8 Social Studies Online Economics: Grade 8 Blueprint Skill: Identify various forms of taxation (i.e., tariffs, sales tax, and excise tax). Types of Taxes Governments require many types of taxes. Taxes are important to the economy of a country. Individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes when they own a home or land, and in some cases estate taxes when they die. In the United States, federal, state, and local governments all collect taxes. Individual Income Tax An individual income tax or a personal income tax, is a tax on a person’s income. Income can include wages, salaries, and other earnings from one’s occupation Interest earned by savings accounts and certain types of bonds Rents (earnings from rented properties) Individual Income Tax An individual income tax or a personal income tax, is a tax on a person’s income. royalties earned on sales of patented or copyrighted items, such as inventions and books dividends from stock. Income also includes capital gains, which are profits from the sale of stock, real estate, or other investments whose value has increased over time. Individual Income Tax The national governments of the United States and many other countries require citizens to file an individual income tax return each year. Each taxpayer must determine his or her tax liability or the amount of money he or she owes the government. Individual Income Tax The Internal Revenue Service (IRS), an agency of the Department of the Treasury, administers the federal income tax in the United States. Corporate Income Tax All corporations in the United States and Canada must pay tax on their net income (profits) to the federal government and also to most state or provincial governments. The corporate income tax is one of the most controversial types of taxes. the corporate income tax leads to double taxation of corporate income. Income is taxed once when it is earned by the corporation, and a second time when it is paid out to shareholders in the form of dividends. Payroll Tax a payroll tax applies only to wages and salaries. Employers automatically withhold payroll taxes from employees’ wages and forward them to the government. Payroll taxes are the main sources of funding for various social insurance programs, such as those that provide benefits to the poor, elderly, unemployed, and disabled. Consumption Taxes A consumption tax is a tax levied on sales of goods or services. The most important kinds of consumption taxes are general sales taxes, excise taxes, value-added taxes, and tariffs. General Sales Taxes A general sales tax imposes the same tax rate on a wide variety of goods and, in some cases, services. In the United States, most states and many local governments have a general sales tax. Most states exempt certain necessities from sales tax, such as basic groceries and prescription drugs. Both individuals and businesses pay sales tax. Excise Taxes Excise taxes, which are sales taxes on specific goods or services. Excise taxes are also called selective sales taxes. Goods subject to excise taxes in the United States include tobacco products, alcoholic beverages, gasoline, and some luxury items. Excise Taxes Governments sometimes levy excise taxes to pay for specific projects. Some national governments impose an excise tax on airline tickets to help pay for airport improvements or airline security. Revenues from gasoline taxes typically pay for highway construction and improvements. Excise taxes designed to limit consumption of a product, such as taxes on cigarettes and alcoholic beverages, are commonly known as “sin taxes.” Excise Taxes Another type of excise tax is the license tax. Most states require people to buy licenses to engage in certain activities, such as hunting and fishing, operating a motor vehicle, owning a business, and selling alcoholic beverages. Tariffs Tariffs, also called duties or customs duties, are taxes levied on imported or exported goods. Import duties are considered consumption taxes because they are levied on goods to be consumed. They protect domestic industries from foreign competition by making imported goods more expensive than their domestic counterparts. Property Taxes A property tax is a tax on an individual’s, both financial (such as stocks and bonds) and real (such as houses, cars, and artwork). In the United States, state and local governments levy property taxes on buildings—such as homes, office buildings, and factories—and on land. There is no federal property tax. The property tax is by far the largest source of revenue for local governments. Property Taxes The property tax is often unpopular with homeowners. One reason is that, because homes are not sold very often, governments must levy the tax on the estimated value of the dwelling. Some citizens believe that the government overvalues their homes, leading to unfairly high property tax burdens. Estate, Inheritance, and Gift Taxes When a person dies, the property that he or she leaves for others may be subject to tax. An estate tax is a tax on the deceased person’s estate. Most governments levy estate taxes before the deceased person’s property passes to heirs. An inheritance tax also taxes the value of the deceased person’s estate, but after the estate passes to heirs. The inheritors pay the tax. Estate and inheritance taxes are sometimes collectively called death taxes. A gift tax is a tax on the transfer of property between living people. Test Your Knowledge of Taxation Play For Richer For Poorer A tax on a person’s income is Payroll Tax Income Tax Tariff OOPS! Try Again! Correct! Click Here A license tax is a type of Tariff Income Tax Excise Tax OOPS! Try Again! Correct! Click Here The federal income tax in the United States is administered by The U. S Government State Government The Internal Revenue Service OOPS! Try Again! Correct! Click Here Companies must pay tax on their net income called Business Taxes State Income Taxes Corporate Taxes OOPS! Try Again! Correct! Click Here A ___________ tax applies only to wages and salaries. Sales Tax Payroll Tax Excise Tax OOPS! Try Again! Correct! Click Here Which tax is the main source of funding for social programs? Payroll Tax Sales Tax Excise Tax OOPS! Try Again! Correct! Click Here General sales taxes, excise taxes, value-added taxes, and tariffs are what type of taxes? Consumption Tax Tariffs Excise Tax OOPS! Try Again! Correct! Click Here Basic groceries and prescription drugs are usually exempted from Consumption Tax Sales Tax Excise Tax OOPS! Try Again! Correct! Click Here Tobacco products, alcoholic beverages, gasoline, and some luxury items are subject to: Consumption Tax Tariffs Excise Tax OOPS! Try Again! Correct! Click Here Taxes levied on imported or exported goods are: Consumption Tax Tariffs Excise Tax OOPS! Try Again! Correct! Click Here This tax protects domestic industries from foreign competition. Consumption Tax Tariffs Excise Tax OOPS! Try Again! Correct! Click Here More Resources How Stuff Works Tic Tac Taxes The New York City Budget Game Taxation First Gov for Kids