Tax Basics

Purpose of collecting taxes Tax base Tax rate Supply revenue to support the functions of government such as defense, criminal justice, roads, welfare, education, health care. Promote social & economic goals such as discouraging smoking or redistributing income to promote equality. The thing that is taxed. Such as income or price of a product. The percentage paid in tax. Such as 6% sales tax or 4.33% State income tax.

Tax Structures
Tax Structure Proportional Progressive Regressive Definition Takes the same share of income at all income levels. Takes a larger share of income as income increases. Takes a smaller share of income as income increases. (Higher % of overall income spent on taxable goods & services, even if tax is originally same % for all.) State Sales Tax Example State Income Tax Federal Income Tax

What kinds of taxes will you pay in your lifetime?

Tax Income Tax
Example/Details/What is this tax? Tax Base Incidence Tax Structure Who collects? Fair?

Payroll Tax

Property Tax

Sales Tax Corporate Income Tax Excise & Luxury tax User fees & tolls Estate & Inheritance tax

Levied on personal income earned from wages & returns on investments. Deducted directly from employee paychecks. Social Security & Medicare (FICA). Levied on the value of real property, such as land, homes, cars, boats. On sale of goods, paid by the customer at the time of purchase. Tax on company profits. On sale of certain goods & services. Called sin taxes when applied to alcohol, cigarettes. Charged for the use of public facilities and services and for permits & licenses. Levied on some or all of the estate a person leaves behind at death.

Income earned Income earned Value of property Price of good Company profits Quantity of item How much use Value of estate

Single adults & married couples Employers & Employees Property Owners Consumers Corporations, who pass it on to others Consumers

Users Heirs of large estates

Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive Progressive Proportional Regressive

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No

Fed/State/Local

Yes/No