Assignment Go to both Mitt Romney and President Obama’s campaign websites. Read what each candidate plans to do regarding taxes. Make a T chart. With Romney on one side and Obama on the other. Take notes on their plan for taxes. Create a Campaign Poster for ONE candidate aimed at undecided voters. The focus of your poster should be TAXES. Turn in both your T chart and your poster. Due by Nov. 2. No late work will be accepted after Nov. 6 (Election Day).

Taxes Read together. Sin Tax - a relatively high tax designed to raise revenue and reduce consumption of a socially undesirable product such as liquor or tobacco. This tax is used to change behavior. Sometimes they don’t work – because tobacco is inelastic – please still buy cigarettes. But it is a way to raise a lot of revenue for the government.

Video on Sin Tax Sin Tax in the News – Video Answer these questions as you watch. 1. Name three states that tax tobacco and alcohol. 2. How much are they proposing to tax each alcoholic drink? 3. What do you think?

Make a quick T chart. Reasons For the sugar tax Against the Sugar Tax

What about taxing other sins? It is proven that sugar is harmful to your health. Should sugary foods be taxed to deter Americans from eating sugary foods, which could down the line cause health problems and burden the Medicare system? Fox News on Sugar Tax

Criteria for Effective Taxes 1. Are they fair? Should everyone pay the same amount? Should wealthier people pay more than those with lower incomes. Tax Loopholes – exceptions or oversights in the tax law that allow some people and businesses to avoid paying taxes.

Video on Loopholes Larry the Loophole List some of the criticisms of big business that Larry the Loophole talks about. The President on Loopholes What kind of loophole is the President talking about?

Corporate Tax Rates The Daily Show

Criteria for Effective Taxes 1. Simplicity 1. The Individual income tax – tax on people’s earnings – is a prime example of a complex tax 2. Internal Revenue Service (IRS ) collects our taxes but produces a very complicated book and instructions for our taxes 3. Sales Tax – is an example of a simple tax. Paid at the time of purchase, collected at the time the purchase is made.

Criteria for Effective Taxes 1. Efficiency 1. Does the tax raise enough revenue to be worthwhile? 2. Luxury tax on small private aircraft – 1. Sounds good…but the tax caused less people to buy the airplanes so layoffs happened 2. But it only collected 53,000 in one year because so few planes were sold. 3. The 53,000 was less than the unemployment benefits paid out to the people who lost their jobs. 4. Congress repealed the tax on small aircraft because it didn’t’ make sense

Benefit Principle of Taxation Those who benefit from govt. goods and services should pay in proportion to the amount of benefits they receive. For example, Gov’t pays for highways. Those who drive on the highways more, pay the toll fees. For example, those who drive more pay more gas tax – this gas tax goes to keeping our roads and highways in shape.

Ability-to-pay principle of taxation. The belief that people should be taxed according to their ability to pay regardless of the benefits they receive. Example: A family that makes $20,000 pays a tax rate of 14% - 2,800. Which is a lot of money to them. A family that makes $100,000 can afford to pay a higher tax rate than 14% and suffer much less discomfort.

Types of Taxes Proportional Tax – imposes the same percentage of taxation on everyone regardless of income If income tax rate is 20%, an individual with $10,000 income pays $2,000. A person with $100,000 pays $20,000. Do you think this is fair?

Types of Taxes Average Tax Rate Total taxable income divided by the total income – is constant, regardless of income. If a person’s total income goes up, the percentage of total income paid in taxes does not change.

Types of Taxes A progressive tax – a tax that imposes a higher percentage rate of taxation on persons with higher incomes. These use a marginal tax rate, a tax rate that applies to the next dollar of taxable income, that increases as the amount of taxable income increases.

Types of Taxes Regressive Tax A tax that imposes a higher percentage rate of taxation on low incomes than on high incomes. For example, a person with an annual income of $10,000 may spend $5000 on food and clothing, while another person with an annual income of $100,000 may spend $20,000 on food and clothing. If the state sales tax is 4% the person with the lower income is paying a higher percentage of total income in taxes.

Poor vs. Rich Pay attention to his sarcasm. What is his point? Be ready to discuss.

Daily Show Bringing it all together. What is the class warfare the President mentions? What does he want to do to the wealthy? What does he say we need to do to other govt programs?

Summative Write a 1 paragraph summary of what you learned today.