1. Taxes

2. Tax - A required payment to a local, state, or national government
Tax - A required payment to a local, state, or national government. Used to pay for the costs of running the government, and the programs, projects, and facilities the government creates for the people.
Revenue - the income received by a government from taxes and other non-tax sources

3. Three types of Taxes
Proportional Tax - The percentage of income payed in taxes is the same for all income levels.
Ex. everyone pays a 6% income tax, at all income levels
Progressive Taxes - The percentage of income payed in taxes increases as income increases
Ex. You pay more as you make more, Tax Brackets
Regressive Taxes - The percentage of income paid in taxes decreases as income increases
Ex. Our current sales tax system
Ex. Everyone pays $4 to use the toll road
Which is the most fair?
What does our income tax look like?

4. Progressive Income Tax
Out of $500, almost $125 is paid in taxes.
And the more you make, the more you pay.
Where does all this money go?

5. Progressive Tax System
CA State Income Tax
Progressive Tax System
If your income range is between
$0 and $7,168, your tax rate on every dollar of income earned is 1%
$7,169 and $16,994, your tax rate on every dollar of income earned is 2%
$16,995 and $26,821, your tax rate on every dollar of income earned is 4%
$26,822 and $37,233, your tax rate on every dollar of income earned is 6%
$37,234 and $47,055, your tax rate on every dollar of income earned is 8%
$47,056 and $1,000,000, your tax rate on every dollar of income earned is 9.3%
$1,000,001 and over, your tax rate on every dollar of income earned is 10.3%

6. California Sales Tax - Regressive Tax
7.5% tax on everything you purchase
Why is this a Regressive Tax if everyone pays the same % percentage?
Middle income: $35k/yr
pays 37 cents on DWBC
High income: $300k/yr
pays 37 cents on DWBC

7. Tariff - Taxes on imported goods
The government might also design taxes or tax credits that gain revenue, while simultaneously discouraging or promoting the purchase of a good.
Tariff - Taxes on imported goods
Used to protect American farmers and industries. Increases prices of imports, keeping the price of American products competitive.

8. Excise Tax - General revenue tax on the sale or manufacture of a good.
Usually exists for a purpose related to the good.
Cigarettes cause many health issues that taxpayers end up paying for through government provided healthcare.
Cigarette Excise Tax
The excise tax on cigarettes raises revenue to fund government provided healthcare, and discourages the purchase of cigarettes.

9. But, after .65 cents in taxes, your gallon of gas cost $4.21
On February 25, 2013, the actual cost of a gallon of gasoline was only $3.56
But, after .65 cents in taxes, your gallon of gas cost $4.21
this excise tax has a purpose: To collect revenue and pay for pollution and environmental projects

10. Tax Credits and Incentives
Eco Friendly Auto Tax Credit
Tax Incentive
In order to promote the purchase of Eco Friendly vehicles, and to decrease the consumption of gasoline, the government offered tax credits that would reduce the amount of tax you had to pay at the end of the year.

11. If the government increase taxes rates tax revenue will increase
The Laffer Curve
If the government increase taxes rates tax revenue will increase
% Tax Rate
If the tax rate becomes too high, tax revenue will fall since workers have no incentive to work harder
Tax Revenue 12

12. But, the revenue collected from these taxes goes to pay for

14. How the government spends its (our) money
Government Spending
How the government spends its (our) money

15. Out of $500, almost $125 was paid in taxes.
Where does all this money go?

16. Federal Spending National government
Mandatory Spending - money that lawmakers are required to spend on certain programs or to use for interest payments on the national debt.
Example: Social Security, Interest on Debts to China, Welfare Programs
Medicare - national health insurance program for people over 65 or who are disabled
Medicaid - Program benefiting low-income families, people with disabilities, and elderly

17. Discretionary Spending - Spending in which the government can make choices.
Government uses their discretion, or makes a decision, to include, remove, increase, or decrease funds for specific programs in the government budget.

18. State Discretionary Spending

19. Local Governments
The primary source of local government revenue is property taxes. Responsible for paying for public schools, parks, roads, law enforcement