CHOOSE 1 FORM OF TAXATION AND DESCRIBE IT. JANUARY 11, 2016

WHAT ARE SOME KINDS OF TAXES YOU AND YOUR FAMILY PAY? You Need: 1.Class notes 2.Vocabulary Chart OBJECTIVE: I CAN EVALUATE DIFFERENT FORMS OF TAXES AT EACH LEVEL OF GOVERNMENT BASED ON PRINCIPLE, INCIDENCE, AND TYPE.

TAX STRUCTURES Under the proportional taxes, each income group has the same percentage rate of tax to pay- 10% In the regressive tax structure, the lower income individuals pay a greater percentage of their income in taxes than do the upper income individuals. In the progressive scenario, the lower income individuals pay a lower percentage of their income than do the upper income. As income increases, so does the percentage of taxes paid.

PROPORTIONAL TAXES A proportional tax requires the same % from each person’s income. A sales tax is an example This tax affects the less wealthy persons more heavily than it does the richer ones. The amount taxed on any item is the same dollar amount for each, but it represents a larger share of the less well-off person’s financial resources.

PROPORTIONAL SALES TAXES CAN BE REGRESSIVE ON INDIVIDUALS Poorer people tend to spend a greater % of their income on basic cost items- –Food, clothing, shelter, transportation in contrast to those at the higher income levels.

PROPORTIONAL SALES TAXES, CONT. The spending habits of 2 families with incomes of $50,000 and $75,000 may differ significantly. The basic necessities of life- bread, milk, butter, for example- differ little in quantity purchased by a family of four at these income levels.

EXAMPLE: PROPORTIONAL TAX- REGRESSIVE EFFECT Groceries for a family of 4 (2 teenagers) might cost $200/week A sales tax of 4.5% would be $9/week Over 1 year, the sales tax on groceries would total $468 For a family with an income of $100,000/year=.468% of income For the same family (same eating habits) earing $50,000/year, sales tax on groceries=.936% of income

PROPORTIONAL SALES TAXES TAX THE WEALTHIER, LESS The family with the higher income level spends a lower % on the sales tax related to these items.

BUT PROPORTIONAL SALES TAXES TAX THE LESS WEALTHY, MORE The family with the lower income level spends a higher percentage on the sales tax related to these items.

DO NOW: 1.Update vocabulary chart. 2.Answer this HOTS question in learning log: (you may work with shoulder partner) Do you feel our current tax system is effectively taking care of our needs as citizens? Explain.

WHICH TAX STRUCTURE TAKES THE SAME % OF INCOME FROM EACH TAXPAYER, REGARDLESS OF THEIR INCOME LEVELS? A. FIXED B. PROPORTIONAL C. REGRESSIVE D. PROGRESSIVE JANUARY 12, 2016

You Need: 1.Class notes 2.Vocabulary Chart OBJECTIVE: I CAN EVALUATE DIFFERENT FORMS OF TAXES AT EACH LEVEL OF GOVERNMENT BASED ON PRINCIPLE, INCIDENCE, AND TYPE.

TAX STRUCTURES Under the proportional taxes, each income group has the same percentage rate of tax to pay- 10% In the regressive tax structure, the lower income individuals pay a greater percentage of their income in taxes than do the upper income individuals. In the progressive scenario, the lower income individuals pay a lower percentage of their income than do the upper income. As income increases, so does the percentage of taxes paid.

REGRESSIVE TAXES A regressive tax requires those with higher incomes pay power percentages of their income. Social Security taxation system At the beginning income levels all individuals pay 7.65% of their income in FICA tax FICA taxes are not collected after one’s income reaches $68,400 (FICA= Federal Insurance Contributions Act)

REGRESSIVE TAXES, CONT. FICA is a REGRESSIVE TAX. An individual earning $68,400 would pay $5, each year in FICA taxes. An individual earning twice that rate, or $136,800, would pay the same FICA tax amount or 3.825%- ½ the % of income that the $68,400 earner would pay!!

TAX STRUCTURES Under the proportional taxes, each income group has the same percentage rate of tax to pay- 10% In the regressive tax structure, the lower income individuals pay a greater percentage of their income in taxes than do the upper income individuals. In the progressive scenario, the lower income individuals pay a lower percentage of their income than do the upper income. As income increases, so does the percentage of taxes paid.

PROGRESSIVE TAXES Progressive taxes are those that increase as a percentage along with income. Federal Income Taxes are designed to be progressive.

TAX BRACKETS TAXABLE INCOME Joint ReturnSingle TaxpayerRate $0-$12,000$0-$6,00010% 12,000-46,7006,000-27, , ,85027,950-67, , ,95067, , , ,050141, , ,050 and up 38.6

DO NOW: UPDATE VOCABULARY CHART

JOT THOUGHT Of the 3 tax structures, proportional, regressive, and progressive, which one do you like the best and think is the best form for the USA? Choose one and explain why you chose that option. REMEMBER- JUSTIFY YOUR ANSWER!

IN WHICH WAY DOES THE U.S. SYSTEM OF PROGRESSIVE TAXATION AFFECT TAX LIABILITY? A. ASSESSING TAXES AT A HIGHER RATE FOR INDIVIDUALS WHO EARN MORE B. FAVORING SALES AND PROPERTY TAXES OVER INCOME TAXES C. MAKING EVERYONE PAY INCOME TAXES AT THE SAME TAX RATE D. PLACING A HEAVIER TAX BURDEN ON THE POOR THAN ON THE RICH JANUARY 13, 2016

2 TERMS TO KNOW: 1.Benefits Received Principle 2.Ability to Pay Principle *All taxes are justified based on these 2 principles.

1. BENEFITS RECEIVED PRINCIPLE Taxes based on this are only paid by those who use the service the tax supports.

ABILITY TO PAY PRINCIPLE These taxes collect a higher amount of taxes from those who earn a higher income.

EXPLAIN WHICH OF THE 2 PRINCIPLES OF TAXATION IS THE MOST FAIR AND WHY.

POSTER Must include: (100 points total) 1.Title (10 points) 2.Description of the tax type (3-4 sentences) (30 points) 3.Example of the tax type- real life scenario. (30 points) 4.Picture (10 points) 5.Poster must be colored (10 points) 6.No blank space-fill the poster (10 points) Place name and period # on back of poster

SALES TAX IS CONSIDERED A REGRESSIVE TAX BECAUSE IT PLACES THE LARGEST PROPORTIONAL BURDEN ON A. PEOPLE WHO OWN VALUABLE REAL ESTATE B. CORPORATIONS IN THE RETAIL INDUSTRY C. NONPROFIT ORGANIZATIONS D. LOW-INCOME HOUSEHOLDS JANUARY 14, 2015

WHICH TAX SYSTEM DO YOU THINK IS BEST FOR THE USA? EXPLAIN.

READING ACTIVITY 100 points- will count as a quiz score in gradebook. (30%) Answer in complete sentences! Points will be deducted for not using them. Pace yourself. You need to answer all questions and hand in at the end of class.