Taxation. Taxes “In this world, nothing is certain but death and taxes.” – Ben Franklin “ Taxation is the price we pay for civilization.” – SC Justice.

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The Design of the Tax System

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Presentation transcript:

Taxation

Taxes “In this world, nothing is certain but death and taxes.” – Ben Franklin “ Taxation is the price we pay for civilization.” – SC Justice Oliver Wendell Holmes “No taxation without representation.” – framers of the US Constitution

Adam Smith’s Principles on Taxation  Wealth of Nations, 1776(father of modern capitalism) 1. Equity – believed the rich should pay a higher tax than the poor 2. Simplicity – tax laws should be straight forward 3. Efficiency – maximum gain for gov’t while inflicting minimal loss on taxpayers

Who should pay and why? Ability-to-pay principle – people should be taxed according to their income (rich taxed more and poor taxed less)….Fed/state income taxes are based on this

Who should pay and why? Benefits received principle – if you benefit from a program, you should pay for it (e.g. if you drive you should pay for the upkeep of our highway system)

Tax Structure 1. Proportional Tax– takes the same share of income at all income levels (e.g. Property/School tax)

2.Progressive Tax– takes a larger share of income as income increases (e.g. Income Tax)

3. Regressive Tax– takes a smaller share of income as income increases (e.g. Sales Tax- poor pay more of their income in sales tax than the rich )

ProportionalProgressiveRegressive Property Taxes Sales Taxes Payroll Taxes Income Taxes Excise/Luxury Taxes (Sin taxes) User fees/tolls Estate/Inheritance Taxes

ProportionalProgressiveRegressive Property taxesIncome taxesSales User Fees/TollsLuxuryExcise Payroll (Medicare)Estate/Inheritance Payroll (Social Security) Property Taxes Sales Taxes Payroll Taxes Income Taxes Excise/Luxury Taxes (Sin taxes) User fees/tolls Estate/Inheritance Taxes

10 Things you need after you graduate from East... are you going to be taxed on it? As you either head into college or on to work, there are some things you are going to need/want you may only list school appropriate items) List 6 things (3 “essentials” and 3“wants”) Use website- The Sales Tax Clearinghouse -look up the sales tax of the state you will live in NEXT school year. Look up the price point for each of the 10 items cite the retailer that you found that has your item in stock compute the sales tax on each item come up with a final tally Create a chart to organize this info. Real price points (do not fabricate them). Be creative- pictures/visuals of your items and their retailers you are “buying” from (i.e. Best Buy, Amazon, etc….) 24 points – Formative grade