1. Types of Taxes
Chapter 11

2. Federal, State & Local Taxes
Federal Income Taxes
Social Security Taxes
Medicare Taxes
State Income Taxes
Sales Tax
Excise Tax
Property Taxes
Local Taxes

3. Types of Taxes Progressive Tax- Regressive Tax- Proportional Tax
As income ↑ => Average Tax Rate ↑
Example: U.S. Federal Income Tax
Regressive Tax-
As income ↑ => Average Tax Rate ↓
Example: Gasoline Tax, Bridge Tax
Proportional Tax
Regardless of income level => Average Tax Rate unchanged
Example: Flat Income Tax, Corporate Taxes
Excise Tax
Flat rate per unit => paid at purchase
Example: Gasoline ($0.50 per gallon), cigarettes (over $200 per pack)
(both are also regressive taxes)
Some taxes can
be two types!

4. Plus $1.01 per pack Federal Tax!
Excise Taxes
Plus $1.01 per pack Federal Tax!

5. Tax Reading

6. 2014 California State Income Tax
Tax Bracket (Single)
Marginal Tax Rate
$0+
1.00%
$7,582+
2.00%
$17,976+
4.00%
$28,371+
6.00%
$39,384+
8.00%
$49,774+
9.30%
$254,250+
10.30%
$305,100+
11.30%
$508,500+
12.30%

7. 2013 Federal Tax Rate Brackets Bush Tax cuts are now permanent
Single
Married filing Jointly or Qualifying Widow(er)
10%
Up to $8,925
Up to $17,850
15%
$8,926 – $36,250
$17,851 – $72,500
25%
$36,251 – $87,850
$72,501 – $146,400
28%
$87,851 – $183,250
$146,401 – $223,050
33%
$183,251 – $398,350
$223,051 – $398,350
35%
$398,351 – $400,000
$398,351 – $450,000
39.6%
$400,001 +
$450,001 +
Standard Deduction
$6,100
$12,200
Bush Tax cuts are now permanent
New top bracket

8. 2 Wage Earners $151,026 Federal Taxes $5,855 $7,254 Social Security
John earns $500,000
Mary earns $60,000
$151,026
$7,254
$9,995
$52,830
$277,922
$23,160
$222,078
44.0%
Federal Taxes
Social Security
Medicare
California Tax
Yearly Bring Home Pay
Monthly Bring Home Pay
Total Taxes Paid
Overall Tax % Rate
$5,855
$2,520
$870
$1,617
$49,137
$4,094
$10,863
18.0%

9. Who Pays Federal Income Taxes
Top 1% of Taxpayers
Pay 38% of all taxes
Earn 20% of all income
1.4 million households
$343,000 + Up
Top 10% of Taxpayers
Pay 70% of all income taxes
Earn 46% of income
Bottom 50% of Taxpayers
Pay 3% of Income Taxes
Earn 13% of Income
Below $33,000 ($16/hour working full time)

10. Death of Middle Class?

11. Basic Income