1. Required payment to a local, state or national government
Chapter 14 Taxes
Required payment to a local, state or national government

2. Purpose: Revenue Tax Base
Income received by a government from taxes and other non-tax sources
Tax Base
Income, property, good or service that is subject to tax
Individual, sales, property, corporate tax

3. Tax structure and base Proportional Tax Progressive Tax Regressive Tax
% of income paid in taxes remains the same for all levels
Progressive Tax
% of income paid in taxes increases as income increases
Regressive Tax
% of income paid in taxes decreases as income increases
Sales Tax

4. Characteristics of a Good Tax
Simplicity
Efficiency
Gov. admin. Should collect taxes w/out spending too much $
Certainty
When is it due, how much
Equity

5. Who Bears the Burden of Taxes
The more inelastic the demand, the more easily the seller can shift the tax to consumers. The more elastic the demand, the more the seller bears the burden.

6. Federal Taxes 6 Major Sources of Tax Revenue Individual and Corporate
Income
Social Insurance
Excise
Estate and Gift
Imports

7. Individual 47% of Federal Revenue
Withholding-taken out before you receive it
Tax Return-form used to file income taxes
Taxable Income-person’s gross income minus exemptions and deductions
Personal Exemptions-set amounts that you subract from your gross income
Deductions

8. Social Security, Medicare, and Unemployment Taxes
Provides benefits to surviving family members of wage earners
Medicare-national health insurance program that helps pay for health care for people over age 65 or with certain disabilities

9. Other Types of Taxes
Excise
Estate Tax
Gift Tax-$10,000
Import

10. Where does Federal Spending Go?
Mandatory Spending
Certain programs, interest for national debt
Discretionary Spending
Defense, education, training etc.
The estimated population of the United States is 312,728,455 so each citizen's share of this debt is $50,
The National Debt has continued to increase an average of $3.97 billion per day since September 28, 2007!
                                                

12. State and Local Taxes State Budget Operating Budget Capital Budget
Day-to-day expenses, salaries
Capital Budget
Major capital, or investment

13. Where are state taxes spent?
Education
Public Safety
Highways and Transportation
Public Welfare
Arts and Recreation
Administration

14. State Tax Revenue
For every dollar a state spends, it must take in a dollar in revenue
Cannot tax imports, exports, non-profits
Sales Tax-main source of revenue for state gov.
usually between 3-8

15. Local Government Spending
Schools
Law
Fire
Public facilities
Parks
Property taxes
Paid by people who own homes
Main source of income