Ch. 25

* Personal income: Tax on an individual’s yearly income. * Granted by the 16th amendment * April 15th is income tax day. * Corporate income: Tax on a corporation’s profit. * Social Insurance: Social security tax. (FICA). * Excise: Special tax on alcohol, tobacco, and gasoline. * Estate: Tax on the assets of the deceased. * Inheritance: Tax paid on anything person inherits. * Gift: Tax paid on the value of an expensive gift received. * Sales: Tax paid on all purchases. * Property: Tax on the value of property. Can include buildings, stocks, bonds, cars.

* Revenue: Money the government receives. * Expenditures: Money the government spends. * 60 to 80 percent of state and local government revenue comes from taxation. * Intergovernmental Revenue: Money received from other governments. * Example: States receive a big chunk of money from the Federal Government. Local governments then can get some of that money from the state. * Nearly 100 percent of federal government revenue comes from taxes.

* The government sometimes abuses its power to tax which leads to revolts. * Stamp Act (1765): British tax on virtually all goods. * Tea Act (1773): British tax on tea. Led to the Boston Tea Party. * British taxes lead to the American Revolution where the United States became a free country after defeating England.

* Shay’s Rebellion (1786): Heavy state taxes in Massachusetts put many farmers in debt. Daniel Shay led a group of 1,200 farmers in a revolt. The revolt was put down. * Tariff of 1828: High tariff on imports. Hurt the southern states because of lack of industries. Secession was openly discussed in South Carolina. * Tariff: Tax on imports. * Secession: Separate from the nation.

* The first government of the United States was the Articles of Confederation. * The national government could not tax under the Articles. * Under the Constitution, the government is given a limited power to tax to keep it from abusing its power.

* The Constitution gives the government the power to tax. * All appropriations bills (tax bills) are introduced in the House of Representatives. * Appropriations bills are laws that allow spending for a particular activity * All national taxes are the same throughout the country. * The 14th amendment says all groups must be taxed equally.

* Progressive tax: Based on income. Higher taxes on those with higher incomes. Those who make less than a certain minimum pay no taxes. * Regressive tax: People pay the same amount with no consideration of income. * Effects people with lower incomes because it’s a larger percentage of their total income. * Proportional tax: Takes the same percentage of all incomes.

* Tax on income * 16th amendment (1913): Gave the government the power to collect income tax. * Personal income and corporate income are the two types.

* The deadline is April 15th. * All taxpayers fill out a tax return form and send it to the Internal Revenue Service (IRS). * An exemption is a portion of income that is not taxed. * Deductions are for medical expenses and charitable contributions. They are not taxed. * Everything else is taxable income.

* Tax paid at the time of purchase. * The revenue is sent to state and local governments. * Many state governments exclude necessary items from the sales tax. * North Carolina is the 1 st Friday in August

* Employers withhold funds from checks to pay the state and national government. * Because of this, taxpayers do not pay as much at the end of the year. * Some taxpayers receive a refund.

* People with higher incomes pay a higher percentage in taxes. * There are tax percentage rates of 10%, 15%, 25%, 28%, 33%, and 35%. * The belief is that people with less money need more for necessities.

* The property is examined to assess the value. * Local governments set the tax rate. * Property taxes have increased steadily over the years.

* Designed to raise revenue and protect American businesses. * Products are made cheaper in other countries and brought to America. * When America charges a tariff, the other country charges a tariff on American goods. * Tariffs have caused many problems in U.S. history.

* The government will sell and rent land. * The government will charge tolls for the use of roads and canals. * The government will charge fees for driving, hunting, fishing, and getting married. * Charge fines (traffic). * Government run lotteries to provide revenue, but they are controversial.

Answer the following on a separate piece of paper and turn in - * In at least 2 paragraphs, explain which tax classification you feel is the most fair? Give at least 3 reasons why. * If the federal government needed to increase their revenue, which kind of tax (ex. Sales, excise, estate, income…..) do you think it should increase? Why? 1-2 paragraphs