1. Taxes Grab a card and don’t show anyone

2. Are you going to cooperate with voluntary compliance? Each card represents a part of your income. Each card represents a part of your income. Face cards represent cash, payments under the table, “tax free” Face cards represent cash, payments under the table, “tax free” 2-5 represent tips i.e. a waiter, hair stylist, parking garage attendant, etc. 2-5 represent tips i.e. a waiter, hair stylist, parking garage attendant, etc. If you pulled a 6-10 you must return it immediately. (they represent your paycheck and you must deposit it to the bank.) If you pulled a 6-10 you must return it immediately. (they represent your paycheck and you must deposit it to the bank.)

3. Voluntary compliance Let’s count the cards Let’s count the cards How many are we missing? How many are we missing? Now, lets see how the government will use the taxes. Now, lets see how the government will use the taxes.

4. Tax Revenue for Heritage High School Perfect World Perfect World Library- 5 Library- 5 Textbook -5 Textbook -5 Electricity/AC/Heat-12 Electricity/AC/Heat-12 Teachers- 17 Teachers- 17 Admin. Classif.-8 Admin. Classif.-8 Cafeteria- 5 Cafeteria- 5 Reality Library- Library- Textbook - Textbook - Electricity/AC/Heat- Electricity/AC/Heat- Teachers- Teachers- Admin. Classif- Admin. Classif- Cafeteria- Cafeteria-

5. Tax Talk Deductibles (write offs)- Items withdrawn from taxes i.e. charity, business expenses, etc. Deductibles (write offs)- Items withdrawn from taxes i.e. charity, business expenses, etc. Is Social Security a tax? Is Social Security a tax? What is a tax shelter? What is a tax shelter?

6. What are taxes? A required payment to a local, state, or national government. Taxes give the government money to operate A required payment to a local, state, or national government. Taxes give the government money to operate There are three tax structures There are three tax structures Proportional- flat tax Proportional- flat tax Progressive- Income tax Progressive- Income tax Regressive- Sales tax Regressive- Sales tax

7. Federal Taxes Stats to consider: Stats to consider: 2004, the fed. Gov’t took in $1.88 trillion in taxes, which is $6,300 per person. 2004, the fed. Gov’t took in $1.88 trillion in taxes, which is $6,300 per person. The federal government uses 6 sources of tax revenue. The federal government uses 6 sources of tax revenue. Individual income Individual income Corporate income Corporate income Social insurance Social insurance Estate and gift tax Estate and gift tax Customs duties Customs duties Miscellaneous receipts Miscellaneous receipts

8. Hold on… I’m coming…. Withholding- taxes taken from income check…i.e. Federal Insurance Contributions Act (FICA), Medicare, SSN Withholding- taxes taken from income check…i.e. Federal Insurance Contributions Act (FICA), Medicare, SSN Tax return – form used to file income taxes Tax return – form used to file income taxes Taxable income – income on which tax must be paid; total income minus exemptions and deductions. Taxable income – income on which tax must be paid; total income minus exemptions and deductions. Personal exemption- set amt. that you subtract from your gross income for yourself, your spouse, and any dependents. Personal exemption- set amt. that you subtract from your gross income for yourself, your spouse, and any dependents. Deductions – variable amt. you can deduct from gross income. Deductions – variable amt. you can deduct from gross income. More info. On page 366

9. You’re So Bossy This is one of your employees, please determine their net-pay HoursEarnings HoursEarnings 20 200.00 Taxable Wages 200.00 200.00 Description Amount Description Amount FICA 15.20 FICA 15.20 Federal 10.25 Federal 10.25 State 5.10 State 5.10 City 1.00 City 1.00 Total Taxes 31.55 Calculate net pay=

10. Work in pairs, study some stubs Grab two out of the six pay stubs and answer the following for each stub Grab two out of the six pay stubs and answer the following for each stub 1. Name of establishment 1. Name of establishment 2. Gross earnings for single pay period 2. Gross earnings for single pay period 3. Net earnings for single pay period 3. Net earnings for single pay period 4. Amt. of FICA or Social Security 4. Amt. of FICA or Social Security 5. What is the difference between year to date and current amount of one pay period? 5. What is the difference between year to date and current amount of one pay period?

11. And the other…… In pairs brainstorm 2 examples for each. Excise Tax Excise Tax Estates Tax Estates Tax Gift Tax Gift Tax Gasoline, cigarettes, alcoholic beverages Gasoline, cigarettes, alcoholic beverages Real estate, jewelry, paintings, insurance. Real estate, jewelry, paintings, insurance. Under $11,000 a year Under $11,000 a year

12. Quick check 1. Provide an example of a write off 1. Provide an example of a write off 2. What is an example of a federal tax? 2. What is an example of a federal tax? 3. Why do taxes come directly out of your pay stub? 3. Why do taxes come directly out of your pay stub? 4. What is a “tax return?” 4. What is a “tax return?” 5. What is the difference between an estate tax and property tax? 5. What is the difference between an estate tax and property tax?

13. H.W. See Figure 14.5 pg: 367 and answer the questions I am married and make $119,950 what is the amount I am taxed over? I am married and make $119,950 what is the amount I am taxed over? I am single and a student at Cal Poly and make 2,000. How much do I pay in taxes? I am single and a student at Cal Poly and make 2,000. How much do I pay in taxes?

14. H.W. Social Security Insurance policy for old-age, survivors, and Disability insurance Insurance policy for old-age, survivors, and Disability insurance Paragraph 1:Why was SSI created? Paragraph 1:Why was SSI created? Paragraph 2-3 Why is it failing? Provide at least two examples and include your sources on a separate page. Use MLA format. Paragraph 2-3 Why is it failing? Provide at least two examples and include your sources on a separate page. Use MLA format. Length: 3 paragraphs. Length: 3 paragraphs.