& Taxation Government Spending

Taxation

Why Taxes?

Government Expenses Mandatory Entitlements Interest on Debt Operating Budget Discretionary should we or shouldn't we?

Why so much Political Debate? Discretionary spending – should we or shouldn't we? Discretionary spending – should we or shouldn't we? Capital budget – major projects Capital budget – major projects Defense, Education Defense, Education Tax incentives to encourage certain behaviors – tax credits or exemptions Tax incentives to encourage certain behaviors – tax credits or exemptions Shouldn’t we work towards a balanced budget?

Tax Base Areas subject to taxation Income (city, state, federal) Income (city, state, federal) Sales (state) Sales (state) Property (local) Property (local) Corporate income tax (business profits) Corporate income tax (business profits)

Tax Structures Progressive - percentage increases as income increases – income tax (income tax brackets) Progressive - percentage increases as income increases – income tax (income tax brackets) Proportional – flat tax – same percentage regardless of income (property tax) Proportional – flat tax – same percentage regardless of income (property tax) Regressive – smaller percentage of income is taken in taxes as income increases – (sales tax) Regressive – smaller percentage of income is taken in taxes as income increases – (sales tax)

Progressive Structure 16 th Amendment: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. Income Tax

Federal Taxes Why is there money taken out of my check? Why is there money taken out of my check? W4 – withholdings W4 – withholdings How much of my salary is taxed? How much of my salary is taxed? W2 – taxable income W2 – taxable incomeW2 – taxable incomeW2 – taxable income Doesn’t the government realize that I need my salary to live? -Personal exemption Doesn’t the government realize that I need my salary to live? -Personal exemptionPersonal exemptionPersonal exemption What about other expenses too, like work related uniform costs, or education? – deductions What about other expenses too, like work related uniform costs, or education? – deductionsdeductions How much in total do I have to pay the government? How much in total do I have to pay the government? Tax schedule - Brackets Tax schedule - Brackets What if I have paid them too much- 1040ez - tax return (refund?) What if I have paid them too much- 1040ez - tax return (refund?)1040ez - tax return (refund?)1040ez - tax return (refund?)

2013: $3,900

Personal Exemption Individuals are entitled to claim a personal exemption for themselves and any dependents they support. dependents 2013: $3, : $3, : $3, : $3, : $3, : $3,500

Deductions Should I Itemize?Topic 501 Medical and Dental ExpensesTopic 502 Deductible TaxesTopic 503 Home Mortgage PointsTopic 504 Interest ExpenseTopic 505 Charitable ContributionsTopic 506 Miscellaneous ExpensesTopic 508 Business Use of HomeTopic 509 Business Use of CarTopic 510 Business Travel ExpensesTopic 511 Business Entertainment ExpensesTopic 512 Educational ExpensesTopic 513 Employee Business ExpensesTopic 514 Casualty, Disaster, and Theft Losses (Including Federally Declared Disaster Areas) Topic 515