1. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Learn about different tax rates, tax structures, and how to calculate taxes due based on current tax tables. What is a fair tax amount for individuals to pay?

2. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Students will understand the difference between Flat Tax and Progressive Tax, and what it means to “Tax the Rich.”

3. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch This story will help explain the different types of taxes and how they are applied: Ten people decided to have a business lunch once a week. They always met in the same restaurant and the bill was always $100.00 for all 10 people.

4. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Make this chart in your notes and follow along. Flat Tax First person Second person Third person Fourth person Fifth person Sixth person Seventh person Eighth person Ninth person Tenth person Total paid$100

5. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Flat Tax suggests that each person pay the same amount for their lunch: $100 ÷ 10 people = $10 each Flat Tax First person $10.00 Second person $10.00 Third person $10.00 Fourth person $10.00 Fifth person $10.00 Sixth person $10.00 Seventh person $10.00 Eighth person $10.00 Ninth person $10.00 Tenth person $10.00 Total paid$100.00

6. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Progressive Tax suggests that the taxes should be divided according to each persons ability to pay. Because some of the diners were more financially successful than the others, they decided to break up the bill like this: Flat Tax Progressive Tax First person $10.00$0.00 Second person $10.00$0.00 Third person $10.00$0.00 Fourth person $10.00$0.00 Fifth person $10.00$1.00 Sixth person $10.00$3.00 Seventh person $10.00$7.00 Eighth person $10.00$12.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid$100

7. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch After several weeks, the restaurant owner told the group that because they were such good customers, he was going to give them a $20 discount. How would you divided that $20 amongst the group? Flat Tax Progressive Tax How you would divide the $20 First person $10.00$0.00 Second person $10.00$0.00 Third person $10.00$0.00 Fourth person $10.00$0.00 Fifth person $10.00$1.00 Sixth person $10.00$3.00 Seventh person $10.00$7.00 Eighth person $10.00$12.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid$100 $20

8. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch If you divided the money evenly, then you followed a Flat Rate tax refund. If you gave more back to those who paid more, then you followed a Progressive Rate tax refund. Flat Tax Progressive Tax How you would divide the $20 First person $10.00$0.00 Second person $10.00$0.00 Third person $10.00$0.00 Fourth person $10.00$0.00 Fifth person $10.00$1.00 Sixth person $10.00$3.00 Seventh person $10.00$7.00 Eighth person $10.00$12.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid$100 $20 If you gave diners 6 through 10 most of the money back, then you might believe in “Tax Cuts for the Rich.”

9. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Often, in an attempt help the poor (or to win votes), politicians will choose to tax the rich more heavily so that they can give that money to the poor. Flat Tax Progressive Tax How you would divide the $20 First person $10.00$0.00 Second person $10.00$0.00 Third person $10.00$0.00 Fourth person $10.00$0.00 Fifth person $10.00$1.00 Sixth person $10.00$3.00 Seventh person $10.00$7.00 Eighth person $10.00$12.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid $100 $20

10. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch One day, a politician overheard the group discussing how they should split the newly discounted $80 bill, this was his suggestion: All diners should be required to pay their Progressive Tax dinner rate, but then anyone paying less than $5.00 should be given $3.00 back, and if they paid less than $15.00 then they should get $1.00 back. Flat Tax Progressive Tax How you would divide the $20 Politicians Suggestion First person $10.00$0.00-$3.00 $ Free Lunch Second person $10.00$0.00-$3.00 $ Free Lunch Third person $10.00$0.00-$3.00 $ Free Lunch Fourth person $10.00$0.00-$3.00 $ Free Lunch Fifth person $10.00$1.00-$2.00 & Free Lunch Sixth person $10.00$3.00Free Lunch Seventh person $10.00$7.00$6.00 Eighth person $10.00$12.00$11.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid $100 $20$80

11. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch Taxing the Rich means that the rich pay extra taxes so that the poor can receive help from the government. How would you feel if you were Diners one through six? What if you were Diners nine and ten? Flat Tax Progressive Tax How you would divide the $20 Politicians Suggestion First person $10.00$0.00-$3.00 $ Free Lunch Second person $10.00$0.00-$3.00 $ Free Lunch Third person $10.00$0.00-$3.00 $ Free Lunch Fourth person $10.00$0.00-$3.00 $ Free Lunch Fifth person $10.00$1.00-$2.00 & Free Lunch Sixth person $10.00$3.00Free Lunch Seventh person $10.00$7.00$6.00 Eighth person $10.00$12.00$11.00 Ninth person $10.00$18.00 Tenth person $10.00$59.00 Total paid $100 $20$80

12. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch The next week diners 9 and 10 decide to not go to the business lunch anymore. The restaurant manager still offers the discount to the group, so the lunch total comes to $64.00. Who should pay the bill now? Flat Tax Progressive Tax How you would divide the $20 Politicians SuggestionWhat Now First person $10.00$0.00-$3.00 $ Free Lunch? Second person $10.00$0.00-$3.00 $ Free Lunch? Third person $10.00$0.00-$3.00 $ Free Lunch? Fourth person $10.00$0.00-$3.00 $ Free Lunch? Fifth person $10.00$1.00-$2.00 & Free Lunch? Sixth person $10.00$3.00Free Lunch? Seventh person $10.00$7.00$6.00? Eighth person $10.00$12.00$11.00? Ninth person $10.00$18.00 --- Tenth person $10.00$59.00 --- Total paid $100 $20$80$64

13. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch What does a Flat Tax mean? What does a Progressive Tax mean? What does “Tax the Rich” mean?

14. Copyright 2014 © W. Seth Hunter ConsumerMath.org L5.1 Tax Explained at Lunch What does a Flat Tax mean? What does a Progressive Tax mean? What does “Tax the Rich” mean? Each person pay the same amount of taxes. Taxes should be divided according to each persons ability to pay. The rich pay extra taxes so that the poor can receive help from the government.