Taxes & Inflation Estate tax articles

Before we look at taxation, a few words on inflation……………………….

Demand pull Demand-Pull Inflation: –Too many dollars chasing too few goods 3-Types of Inflation

Cost-Push Inflation –Increase in cost of any factors of production –examples: price of oil, wages, steel, etc…. 3-Types of Inflation

Money Supply Inflation 3-Types of Inflation

Who is Helped by inflation? People in large amount of Debt –Large Mortgages, Car Loans, Student Loans If you owe 1 million dollars Inflation lets you pay your debt back in inflated dollars

Who is Hurt by Inflation? People on a fixed income If you receive $1,000 a month (for life) Inflation lowers your purchasing power

Why is inflation Bad? Difficult for Business to plan & price goods/services Difficult to fight once it begins to rise Will Fiscal & Monetary policy today cause inflation in 5-years?

So why do we pay taxes anyway? Okay now, back to taxes……….

The Government Budget Government SpendingGovernment Revenue Taxes All Gov’t Expenses

What do we get for our tax money? Airports Police Fire department Libraries parks Military federal law enforcement post office diplomatic relations food and drug safety interstate highways K-12 education Higher education state parks environmental protection DMV state highways NationalState Local

Types of Taxes Flat (Proportional) --Same % for everyone --Example: Sales Tax Progressive- --Higher % for higher income workers --Example: Income Taxes Regressive- --Consumes larger % of lower income workers’ salary --Example: Alcohol excise tax

Federal Income Tax Progressive Income Tax As income % Tax Rate Tax Rate Single Married Filing Jointly 10%$0 – $8,350$0 – $16,700 15%$8,351– $33,950$16,701 – $67,900 25%$33,951 – $82,250$67,901 – $137,050 28%$82,251 – $171,550$137,051 – $208,850 33%$171,551 – $372,950$208,851 – $372,950 35%$372,951+

Progressive Taxes in “action” Example: If you Earn $100,000 (single) ($ 8, ) x.10 : $ 835 (33, ,351) x.15 : 3,840 (82, ,951) x.25 :12,075 (100, ,251 ) x.28 : 4,970 Total: $ 21,720 or 21.7% Tax Rate Single 10%$0 – $8,350 15%$8,351– $33,950 25%$33,951 – $82,250 28%$82,251 – $171,550 33%$171,551 – $372,950 35%$372,951+ EVERY taxpayer pays 10% on first $8,350 of income

Who pays the most? Top 1% of Taxpayers ($295,000 + Up) –Pay 34% of all taxes Top 5% of Taxpayers ($121,000 + Up) –Pay 55% of all income taxes Bottom 50% of Taxpayers ($27,000 + Below) –Pay 4% of Income Taxes

#1: Why do people pay taxes? The government uses the money to provide various services. Review Quiz

Trade Quiz #2: What are the three types of taxation? Progressive Flat/proportional Regressive Review Quiz

What are some of the other taxes people pay, and which type of tax are they? Tariffs Medicare Tax Social Security Tax Property taxes Excise Tax on tobacco Inheritance/Gift Taxes Proportional (flat) Regressive Progressive (broadly speaking) Proportional (flat) Specific Tax Type of Tax— Proportional, regressive, progressive? Level of gov’t that collects the tax --state, local, nat’l Nat’l State/Nat’l Nat’l Local Nat’l State/Nat’l

Tax Worksheet

Money Supply inflation 2-Types of Inflation Tech Ticker debate on inflation Bakery example