TAXES

Essential Standards The student will define progressive, regressive and proportional taxes. The student will explain how an increase in sales taxes affects different income groups.

What Are Taxes? A tax is a required payment to the government. Without taxes there is NO GOVERNMENT— If you want a REVOLUTION— Stop paying taxes.

Limits of the Power to Tax Taxes must be “for the common defense and the general welfare”… Taxes must be “for the common defense and the general welfare”… They cannot benefit single individuals. They cannot benefit single individuals. Federal taxes must be the same in every state… Federal taxes must be the same in every state… Congress cannot tax churches… Congress cannot tax churches… Nor exports. Nor exports. The 16 th Amendment created the PROGRESSIVE INCOME TAX. The 16 th Amendment created the PROGRESSIVE INCOME TAX. L. Ron Hubbard

Tax Structure Tax base—the income, property, good or service that is being taxed. Income tax—a tax on individual income… Sales tax—a tax on the dollar value of a sale… Property tax—a tax on the value of a property… Corporate income tax— a tax on the value of a company’s profits.

Proportional Taxes Proportional tax—a tax that is the same percentage for everybody. For example—sales tax. A CEO earning $15,000,000/year pays 6% in sales tax… And a car wash worker earning $15,000/year pays 6% in sales tax.

Progressive Taxes The best example of a PROGRESSIVE TAX is the… Income tax… Which was created by the ratification of the 16 th amendment in It created TAX BRACKETS… From 1% for the lowest earners ($4,000--$20,000/year)— Up to 7% for the highest earners ($500,000/year). The highest bracket TODAY is almost 40%.

Regressive Taxes A regressive tax is a tax where the percentage of income paid DECREASES as income increases. Regressive taxes hit low income consumers HARDER than wealthier consumers. For example, the guy who is filling up this car: Is paying the same gas tax as the guy who is filling up this car: Who feels it more?

Which of the following is the best example of a PROPORTIONAL tax? A.) federal income taxes. B.) property taxes. C.) gasoline taxes. D.) state income taxes.

Which of the following is the best example of a REGRESSIVE tax? A.) federal income taxes. B.) estate taxes. C.) gasoline taxes. D.) import taxes.

Which of the following is the best example of a PROGRESSIVE tax? A.) federal income taxes. B.) county sales taxes. C.) cigarette taxes. D.) import taxes.

Income Taxes The income tax is a PAY-AS-YOU- EARN tax— Money is WITHHELD from each paycheck— And sent to the government. On or before TAX DAY— April 15— You must file a: TAX RETURN. If you have paid TOO MUCH, you get a… REFUND… If you have not paid ENOUGH, you get a… BILL.

FICA Taxes Employers also withhold money for taxes under the… FICA—Federal Insurance Contributions Act. FICA taxes fund… Social Security—which provides a government pension to Americans over 65… AND… Medicare—national health insurance for Americans over age 65.

Other Taxes Excise tax—a federal tax on the sale or manufacture of a good. Estate tax—a tax on the total value of the money and property of a deceased person. Estates valued at $1.5 million and more are taxed progressively. Gift tax—to prevent people from giving their estates away before death to avoid the estate tax. Tariffs—taxes on imported goods. The Stupid Tax—when you buy lottery tickets, the money goes directly to the government… But smart people don’t buy lottery tickets, so they are EXEMPTED from paying the stupid tax.