Lesson 12: Taxes and Taxation

Required payment to local, state, or national governments

The income received by a government from taxes and other nontax sources

A tax for which the percentage of income paid in taxes increases as income increases

The percentage of income paid in taxes remain the same at all income levels

The percentage of income paid in taxes, decrease as income increases

The income, property, good, or a service that is subject to a tax (something that is taxed)

Tax based on a persons earnings

Tax based on a companies profit

A tax based on real estate in other property

A tax based on goods and services that are sold

The final burden of tax (person who pays it off)

Welfare and Medicare

Military spending and education

• the purpose of tax must be for “the common defense and general welfare”

• A tax cannot go to a single individual

• federal taxes must be the same in every state

• the government cannot tax exports ONLY imports

Allowed the right for an income tax

1. Equity (fairness)

2. Certainty

3. Simplicity (convenience)

4. Efficiency

The idea that income should match tax (ability to pay principal)

The idea that it should be clear when taxes are due, how much is due, and how to pay

Tax laws should be written, so that both the taxpayer and tax collector can understand them

The tax should be able to be collected without spending too much time or money

• Benefits received principle

• Ability to pay principal

People should pay taxes, according to their ability to pay (how much they can pay)

A person should pay taxes based on the level of benefits they expect to receive from the government

Less elastic

Tax incidence

The burden of the tax between consumers and producers

• Seems more fair because everyone pays an equal share

• Simple to calculate an easy to collect

They are not fair, because the rich and the poor pay the same percentage

It is fair because it places a greater burden on the wealthy

• Punishes people who are accumulating more wealth

• Does not encourage people to invest and save

The percentage of income is less to someone who makes more money compared to one who is “poor”

• individual income taxes

• Corporate income taxes

• Social Security, Medicare, and unemployment taxes

• Estate and gift taxes

The tax rate applied to the last dollar of taxable income earned

It takes into account all the different tax brackets and tax rates that apply to your income

The total amount of taxes paid divided by taxable income. It is the percentage of your income that you pay in taxes.

Individuals usually pay most of their income taxes as they earn income

By withholding money from your paycheck based on an estimate of how much you owe in federal income taxes for the year

A persons total income minus exemptions and deductions

April 15th

Progressive

A tax imposed on specific goods or services, such as gasoline, tobacco, and alcohol. It is typically included in the price of the product or service and is paid by the consumer.

A tax on the total value of the money and property of a person who has died

A tax on the money or property that one living person gives you another

To prevent people from avoiding the federal estate tax by giving away property or money before they die

17,000 in a single year

Taxes placed on imported goods

Government spending that is required by law and cannot be changed without a change in the law. It includes programs like Social Security, Medicare, and Medicaid, which provide benefits to eligible individuals regardless of the amount of funding that is available.

A federal health insurance program for people who are 65 or older, or have certain disabilities

Is a joint federal-state program that provides health coverage to people with low incomes

Government spending that is not required by law and can be changed or eliminated through the annual appropriations process. It includes funding for programs like defense, education, and transportation, and is subject to the discretion of Congress and the President.

• food stamps in child nutrition programs

• Retirement, benefits, and insurance for federal workers

• Veterans pension

• In accordance with priorities set by elected local government officials

• Budgets are created, and taxes are collected just like federal governments

• Education

• Public safety

• Public welfare

• Highway and transportation

• Arts and recreations

• Administration

The American revolution