1. Unit 12 Essential Question: Who and what should be taxed?
Taxes and Taxation
Unit 12
Essential Question:
Who and what should be taxed?

2. Tax basics The only things in life for certain are ___ and ____.
(death and taxes)
The debate over “their fair share”…who should pay taxes? Two options…
Ability-to-pay – taxed according to one’s wealth. We have “luxury taxes” on things like jewelry.
Benefits received – taxed according to who get’s the benefit. Toll roads or gas taxes are examples.
Taxes try to add money to gov’t and benefit to people. But…
…deadweight loss can occur…
…it’s when the tax causes more loss than benefit.

3. Types of taxes Tax rate – percent of income (or value) that is paid
Proportional tax – takes same % of income at all income levels (same for everyone). AKA a “flat tax”
Progressive tax – takes larger % of income for higher income levels. The U.S. has this.
Regressive tax – takes smaller % of income for higher income levels.
This is often unintended, but may result with a flat tax (example: $100 tax to poor matters; to the rich, $1000 is still bearable)

4. Tax brackets (see https://www. nerdwallet
Tax brackets (see for details.)