2Are your taxes too high?Do you think that you pay too much in Federal, State, County, and City Taxes?What do you think you get for your Taxes?How many Taxes are you paying?
3Tax StructuresThe way in which taxes are applied can be done in different waysProportional Tax – Percentage remains the same for all who payProgressive Tax – Those who earn more, pay a higher percentage (10%, 15%…35%)Regressive Tax – Those who earn more pay less
4Characteristics of a good Tax Simple – Easily understoodEfficient – Easy to collectCertain – Impossible to avoidEquitable – Fair, and not too much burden
5Effect of TaxesThe effect of taxes is to reduce the amount of consumer and producer surplus, as well as reduce quantity and increase prices. The larger the tax, the more distorted the outcome.Depending on the elasticity, the tax burden may fall more heavily on the producer or the consumer.
6Who should pay?While just about everyone agrees that taxes should be fair, people disagree on what “fair” is.Should those who receive the most benefit from a tax pay the most, or should those who have the greatest ability pay the most?
7Corporations and taxes The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.In fact, GE not only paid no taxes in 2009, but got a $1.1 Billion refund (even when posting over $10 Billion in profits)!Of course, if you tried that…
8Federal TaxesFederal Revenues come from 6 main sources (not including borrowing)Personal Income Tax 43%Social Insurance Tax 39%Corporate Income Tax 10%Excise Tax 4%Estate and Gift Taxes 1%Custom Duties and Tariffs 1%
11Discretionary vs. Mandatory Spending Mandatory spending includes payments the government must make in the form of entitlements (Medicare[elderly], Medicaid[poor], Social Security). Entitlements may be means tested (benefit depends on amount earned), or fixed (you get the benefit no matter what income level)Discretionary spending covers all other outlays by the federal government and includes defense, education, law enforcement, exploration and research, parks and environment, etc.
12State and Local Governments State and local governments also collect taxes, though the taxes collected rely less on personal income taxes, and more on sales taxes, property taxes, and fees.State and local governments spend far more on education, law enforcement, safety, roads, and public improvements.