Tuesday December 2, 2014 Mr. Goblirsch – Economics OBJECTIVE – Students Will Be Able To – SWBAT: - Identify the different types of taxes. AGENDA: 1)WARM-UP: Tax Vocab 2)Finish READING: The Fed Fights Inflation 3)VIDEO: School House Rock: Max the Tax Man (4 min) 4)CONCEPT: Taxes 5)VIDEO: Calculating Federal Income Taxes (7 min) 6)CLOSURE: Need To Know for Macro Quiz TOMORROW! *****MacroEcon Quiz TOMORROW – Ch 10, 12, 13, 16***** ***Workbook P. 68 DUE TODAY – Turn into the Basket*** Tax Vocab WARM-UP: (Follow the directions below) ***5 minutes***  Define the terms below using the glossary of your textbook. 1)Individual income tax3) Property tax 2)Sales tax4) Corporate income tax

STRUCTURED ACADEMIC DISCUSSION 1)Recall that a slogan of the American colonists was “no taxation without representation.”  Why were the colonists angry, and why is it important that people who are taxed be represented in the government? 2)Governments levy taxes that pay for public services provided.  Provide an example of a government service provided for by taxes. 3)Where does the government’s power to tax come from?

FISCAL POLICY – TAXES CHAPTER 14

Chapter 16SectionMain Menu Fiscal and Monetary Policy Tools Fiscal policy toolsMonetary policy tools The federal government and the Federal Reserve both have tools to influence the nation’s economy. 1.increasing government spending 2. cutting taxes Expansionary tools 1.open market operations: bond purchases 2. decreasing the discount rate 3.decreasing reserve requirements Contractionary tools 1.decreasing government spending 2. raising taxes 1.open market operations: bond sales 2. increasing the discount rate 3.increasing reserve requirements Fiscal and Monetary Policy Tools

Chapter 16SectionMain Menu QUICK REVIEW Who conducts monetary policy? Who conducts fiscal policy?

Chapter 14SectionMain Menu PRIOR KNOWLEDGE: Taxes and the Constitution The Power to Tax Article 1, Section 8, Clause 1 of the Constitution grants Congress the power to tax. The Sixteenth Amendment gives Congress the power to levy an income tax. Limits on the Power to Tax The power to tax is also limited through the Constitution: 1. The purpose of the tax must be for “the common defense and general welfare.” 2. Federal taxes must be the same in every state. 3. The government may not tax exports. Taxation is the primary way that the government collects money.

Chapter 14SectionMain Menu A tax base is the income, property, good, or service that is subject to a tax. CONCEPT: Tax Bases and Tax Structures Proportional Taxes –A proportional tax is a tax for which the percentage of income paid in taxes remains the same for all income levels. Progressive Taxes –A progressive tax is a tax for which the percent of income paid in taxes increases as income increases. Regressive Taxes –A regressive tax is a tax for which the percentage of income paid in taxes decreases as income increases.

8 Types of Taxes Figure 9.3

9 Structured Academic Discussion What benefits does the government enjoy in having a progressive income tax? Which form of tax do you feel is the most equitable (fair)? Justify your answer.

Chapter 14SectionMain Menu CONCEPT: Individual Income Taxes “Pay-as-You-Earn” Taxation –Federal income taxes are collected throughout the course of the year as individuals earn income. Tax Withholding –Withholding is the process by which employers take tax payments out of an employee’s pay before he or she receives it. Tax Brackets –The federal income tax is a progressive tax. There are currently 7 tax brackets.

Chapter 14SectionMain Menu U.S. FEDERAL INCOME TAX RATES Tax Rate Single Taxable Income Married Filing Jointly Married Filing Separately Taxable Income Head of Household Taxable Income 10%$0 – $8,925$0 – $17,850$0 – $8,925$0 – $12,750 15%$8,926 – $36,250$17,851 – $72,500$8,926 – $36,250$12,751 – $48,600 25%$36,251 – $87,850$72,501 – $146,400$36,251 – $73,200$48,601 – $125,450 28%$87,851 – $183,250$146,401 – $223,050$73,201 – $111,525$125,451 – $203,150 33%$183,251 – $398,350$223,051 – $398,350$111,526 – $199,175$203,151 – $398,350 35%$398,351 – $400,000$398,351 – $450,000$199,176 – $225,000$398,351 – $425, %$400,001+$450,001+$225,001+$425,001+ WATCH: Calculating Federal Taxes Video (YouTube – Khan Academy)

Chapter 14SectionMain Menu HOURS AND EARNINGS HoursEarnings TAXES AND DEDUCTIONS DescriptionAmount FICA Federal State City Total Taxes TOTAL Taxable Wages Less Taxes Net Pay Exemptions are set amounts that you subtract from your gross income for yourself, your spouse, and any dependents. Deductions are variable amounts that you can subtract from your gross income. CONCEPT: Filing a Tax Return A tax return is a form on which you declare your income to the government and determine your taxable income. Taxable income is a person’s total (or gross) income minus exemptions and deductions.

MACRO QUIZ TOMORROW ***30 MULTIPLE CHOICE QUESTIONS CH 10 - Banking Largest income for banks How a credit card works How a debit card works Mortgage Fractional reserve banking CH 12 – GDP & Business Cycle Components of GDP Real GDP Peak, Trough, Expansion, & Contraction Recession vs. Depression CH 13 – Unemployment, Inflation, & Poverty Calculating unemployment Types of unemployment: Frictional, Seasonal, Structural, Cyclical Underemployment Causes of inflation: Demand-pull theory, Cost- push theory, Wage-price spiral Highest poverty statistics CH 16 – The Fed How many districts Federal Open Market Committee Money supply and Interest rate relationship Tools of the Federal Reserve Easy vs. Tight Money policy