1. Tax basics

2. More info at inflateyourmind
Tax Categories
Progressive taxes
The tax rate increases are one earns more.
Ex: U.S. Federal Income Tax
Regressive taxes
The lower-wage earners pay a larger percentage of their income
Ex: sales tax, property tax
Proportional taxes
Flat tax (everyone pays the same)
Ex: flat-rate income taxes, gross receipts taxes, occupation taxes, amusement admission taxes
Source:
More info at inflateyourmind

3. Main Tax Assessments Federal withholding State withholding
Federal Income Tax
Social security / Medicaid
State withholding
State Income Tax
Unemployment / Disability
Local withholding
Township taxes
Property taxes
Sales tax (consumptive)

4. Other Tax Assessments
Estate tax – collected by the federal government after debts are settled and before heirs collect
Inheritance tax – charged by the state to heirs
Excise tax – indirect tax charged on tobacco, alcohol and gasoline; included in the price. (read more at Wikipedia)
Luxury tax – charged on non-essentials (read more at Wikipedia, Investopedia and theNest
Capital gains – on investments such as stocks, bonds, and real estate (max 20%)
Taxes paid by businesses
Corporate income tax (39.1%)
Payroll taxes (FICA and Medicare)
The estate tax is a tax on the total amount of the estate, after creditors are paid but before any heirs get their bequest. The tax is paid by the estate itself.
Inheritance tax is paid by those who receive a portion of the estate (heirs).
Source:

5. History of Federal Tax Withholding
1791 – 1802 U.S. government funded by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves.
1817 Congress stopped all internal taxes – collected tariffs on imported goods
1862 Civil War – first income tax law
3% on incomes above $600, and 5% for incomes above $10,000.
1872 income tax eliminated during the Reconstruction
Switched to collecting taxes on tobacco and distilled spirits

6. History of Federal Tax Withholding
the U.S. Supreme Court declared income taxes unconstitutional because it was not apportioned among the states in conformity with the Constitution.
1913 Sixteenth Amendment Ratified
allowed for direct taxation and made income tax permanent
1% on incomes above $3,000 and 6% above $500,000
Tax withholding increased during WWI
77% on incomes over $1 million.
As high as 92% during WWII
1937 Congress ratified the Federal Insurance Contributions Act (FICA)

7. Why does the government collect income taxes
They have expenses and bills to pay.
Many people would not pay if they were not forced to.
“The government needs to collect taxes to keep certain industries in the nation running. In America, taxes are collected only on selected goods and items. Food, for example, is not taxed in most locations in the United States”. Quote from ask.com

8. Where does the money come from?
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9. 2018 Tax Brackets

10. 2016 Tax Brackets More info at irs.gov
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More info at irs.gov

11. Tax Distribution
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12. Where is the money going? Federal 2016
2016 spending from

13. Where is the money going? Federal 2017
Your 2014 Taxpayer Receipt

14. Where is the money going? Federal 2015
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15. Where is the money going? Federal 2014
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16. Where is the money going? Federal 2013
More information at: bayoureference and
Where Did My Tax Dollars Go?
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17. Where is the moxney going? State
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18. Pennsylvania State Spending
More information: Pennsylvania State & Local 2014 Spending by Function

19. Where is the money going? Local
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21. Summary We pay taxes to fund services that government provides.
Taxes are assessed on ….
Wages (earned income taxes)
Property (property and school taxes)
Purchases (consumption, excise, luxury taxes)
Estate and inheritance taxes

22. Assignment Read the article “Taxes and the Consumer.”
Answer the questions on the back.
You can work with a partner but everyone should hand in a paper.
I do this because you may disagree on some answers.
Make sure to write you name on the paper before you hand it in.