1. Unequals should be taxed unequally
Warm Up
Unequals should be taxed unequally
Do you agree or disagree with the statement above? Why or why not?

2. Tax Bases and Tax Structures
Tax Base: what is being taxed
Property, income, sales, corporate profits
Proportional Tax (also called a flat rate tax): Percentage taxed remains the same for all incomes
Example: City Income Tax
Progressive Tax: Tax rate increases as income increases
Example: Federal Income Tax
Regressive Tax: Tax rate decreases as income increases
Example: Sales Tax

3. The progressive structure shown here is similar—but not identical—to the federal income tax. What percentage of total income does each earner shown on this graph pay?

4. Assuming this schedule applied to you, in what range would your taxable income fall if you were in the 28 percent tax bracket?

5. This graph of a 2013 study shows the share of income paid in state sales and excise taxes at different income levels. Explain why this shows the regressive nature of these taxes.

6. Review the three tax charts from the perspective of Families A, B, and C. Which tax is most fair for each family based on ability to pay: regressive, progressive, or proportional?

7. 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?

8. Federal Income Tax Main source of revenue for the federal government
Purpose: provide funds to operate the government and pay its workers
Collected in a “pay as you earn” system
Income tax is paid throughout the entire year
Any additional federal taxes are to be paid by the middle of April