How Taxes Work Unit 14.1

Government Revenue Revenue Principles of Taxation Non-Tax Principles of Taxation Benefits-Received People should pay according to the benefit they receive Ability-to-Pay People should pay based on ability, no matter which benefits they receive Criteria for Taxation Simplicity Equity Efficiency

Tax Bases and Structures Types of wealth subject to taxation Individual income tax Corporate income tax Sales tax Property tax Tax Structures Proportional Tax Progressive Tax Regressive Tax

Who Pays the Tax? Elasticity and Taxes

Impact of Taxes on the Economy Resource Allocation Taxing certain goods will transfer resources Productivity and Growth Tax rates high reduces incentive to work? Taxes cause underground economy Economic Behavior Tax Incentives Excise taxes on liquor and cigarettes Tax write-offs for charitable donations