1. 7th Grade Civics Miss Smith *pgs. 299-303
Types of Taxes
7th Grade Civics
Miss Smith
*pgs

2. Income Taxes
Income tax- tax on the earnings of individuals and businesses
The main source of revenue collected by the federal gov.
The amount each citizen pays is calculated based on how much they earn and other factors explained in the U.S. tax code

3. How Much Do We Pay?
Taxpayers can deduct (or subtract) a certain amount of money from their taxes for themselves and their dependents (dependents are people who rely on other people for financial support)
These amounts are called exemptions

4. How do We Pay?
Employers take income tax out of each employees paycheck and forwards it to the government on their behalf

5. Social Security Taxes
Employers also deduct Social Security tax from paychecks
This tax is used to provide income to the retired and people with disabilities

6. State and Local Income Taxes
Most state and city governments also collect income tax
These tax rates are lower than federal income tax rates

7. Corporate Income Taxes
Based on a corporation’s profits
Profit- income a business has left after paying expenses

8. Sales tax is collected on most products sold
Sales and Excise Taxes
Sales tax is collected on most products sold
Excise taxes are like sales taxes but on luxury goods

9. Property Taxes
Property tax- tax on the value of the property owned by a person or business
The main source of income for most local governments
Collected on real and personal property
Real property- land, buildings, and other structures
Personal property- stocks, bonds, jewelry, cars, and boats
Most public school funding comes from property taxes

10. Estate, Inheritance, and Gift Taxes
Estate tax- federal tax on all the wealth a person leaves
Inheritance tax is based on the portion of an estate received by an individual after the estate is divided
Gift taxes are paid on gifts worth more than $13,000

11. Import Taxes
Tariff- import tax on products from other countries (sometimes called a customs duty)
Regulates trade and supports the U.S. economy
Can be used to encourage American industry by making domestic products less expensive than imported products
Or can hurt American consumers by making the products they buy more expensive