1. Financial Literacy Mr. Rotella

2.  Why do we have a federal income tax?  National Defense, Social Security, Medicare, Income Assistance, Environment, Agriculture, and Interest on the National Debt  Federal Government collects taxes to pay for government operations, and goods and services

3.  There are different ways to structure the federal income tax  Has been a challenge in the United States  Perfect Tax Structure  Provides desirable incentives to work, save, and invest  Is viewed as fair  Is easy to understand  Generates sufficient revenues to fund spending decisions

4.  Kinds of Taxes  Proportional  Take some percentage of income from people in all income groups  Progressive  Take a larger percentage of income from people in higher income groups than from people in lower income groups  Regressive  Take a larger percentage of income from people in lower income groups than from higher income groups

5.  Federal Income Tax  Progressive Tax  Based on the “Pay as you Go” Principle