1. Is “equal” fair? In order to be fair, should we make everything equal?
Are “equal” and “fair” the same thing?
Should we try to be “fair?”

2. Which is equal? Which is fair?
Can we apply this to our society? Should we?

3. [ 8.1 ] Understanding Taxes
Learning Objectives
Identify the sources of the government’s authority to tax in the U.S. Constitution.
Describe types of tax bases and tax structures.
Identify who bears the burden of a tax.
Describe the key characteristics of a tax.

4. Tax Structures and Tax Bases
The Constitution says that National Taxes (federal tax) are for the common defense and general welfare, and that they must be uniform among the states.
What do these things mean?

5. Tax Structures and Tax Bases
Article 1, Section 8: Gave Congress the power to tax.
16th Amendment: Establishes a personal income tax.
24th Amendment: Abolishes poll taxes.

6. Tax Structures and Tax Bases
Despite the constitutional limits on its power, the government actually collects a wide variety of taxes. Economists describe these taxes in different ways.
First, they describe how the tax is structured. Economists describe three different tax structures: progressive, proportional, and regressive.
Second, they describe a tax according to the object taxed—the tax base.

7. Tax Structures and Tax Bases
Progressive Taxes
Proportional Taxes
Regressive Taxes
Tax Bases

8. Tax Structures and Tax Bases

9. Tax Structures and Tax Bases

10. The Tax Burden
This graph shows the effect of a tax when the demand for the good being taxed is inelastic.
Do you think consumers or businesses will pay the larger share of the tax? Explain.

11. The Tax Burden
Elasticity of demand for a product affects whether consumers or businesses bear the burden of a tax on it.
Why does the burden shift to businesses if demand is elastic?

12. Key Characteristics of a Tax
Although it is sometimes difficult to decide whether a specific tax is proportional, progressive, or regressive, economists do generally agree on the qualities a tax ought to have.
A tax should have four characteristics: simplicity; efficiency; certainty; and equity, or fairness.

13. Key Characteristics of a Tax
The government’s Internal Revenue Service (IRS) has a “long form” and a simpler “short form” for filing taxes.
What does this cartoon suggest about the tax system?

14. Quiz: The Importance of National Taxes
According to the Constitution, for what purpose can government collect taxes?
A. to pay the nation’s debts and provide for its defense and welfare
B. to discourage exports and promote imports
C. to ensure religious freedom for all citizens
D. to establish the nation’s gross domestic product

15. Quiz: Tax Structures and Tax Bases
What is the tax structure of the federal individual income tax?
A. regressive
B. proportional
C. flat
D. progressive

16. Quiz: The Tax Burden
Who bears the greater burden of a tax on a good or service when demand is inelastic?
A. manufacturers
B. consumers
C. sellers
D. the government

17. Quiz: Key Characteristics of a Tax
Economists generally agree that taxes ought to be
A. simple, efficient, certain, and fair.
B. universal, progressive, fair, and low.
C. simple, proportional, low, and infrequent.
D. high, regressive, simple, and universal.