Tax Facts at a Glance Instructions – have the students copy the important facts onto their chart and place an “x” or check mark in the box for which level of government it is collected by.

Federal Income Tax Tax on wages, salary, tips Largest source of government income Tax rates from 10% to 37% Collected by: Federal There are seven tax brackets – from 10% to 39.6% The more money one earns, the higher the tax rate

FICA Tax (Federal Insurance Contributions Act) Social Security – 6.2% of first $127,000 earned Medicare – 1.45% 2nd Largest source of gov. revenue Collected by: Federal Social Security and medicare is funded through FICA collections. Don’t need to write down %, but one is only taxed on the first $127,000 they earn for this. Why? Since this tax goes to apy social security benefits, and there is a mamximum social security benefit, people are not taxed for contributions they would not receive Not tax refundable, as it is a flat rate

Corporate Income Tax Tax on corporate profits 3rd largest source of government revenues Collected by: Federal Government

Excise Tax Sales tax on specific item Examples: Gasoline, phone service, cigarettes Collected by: Federal & State

Estate Tax Tax on property of a deceased person Estates under $5.4 million exempt Collected by: Federal government If someone has an estate (land, property, money, life insurance) worth more than $5.4 million, their heirs must pay a tax on the property when they die. Less than 2% of all estates must pay this tax. Even if one is worth more than $5.4 million dollars, estate taxes can largely be avoided by estate planning and putting one’s property and assets into trust funds for children.

Gift Tax Tax paid by the receiver of a gift Gifts over $15,000 are taxable Collected by: Federal government The gift tax was created to prevent people from avoiding the estate tax by “giving” their heirs property before they died. Which can still be done to a degree by putting

Custom Duties Tax on imports from other countries U.S. has free trade agreements with most countries – although tariffs are currently increasing Collected by: Federal Government While we have free trade agreements with many countries – Canada and Mexico, we still have lots of tariffs. We tax lumber from Canada. Most of our tariffs are on clothing from Asian countries – taxed at a rate of 1 to 14%. Most electronics have little or no tariffs.

State Income Tax Tax on wages, salaries, tips Georgia tax rate: around 6% Collected by: State The highest state income tax is California (13%) Some state (Florida, Texas and Tennessee) have no income tax. Ask students what effect this has on other taxes – usually high sales tax. Tennessee has the highest state sales tax, 10 to 11%.

Sales Tax Percentage tax on purchases Sales tax rate in Georgia: 4%, plus local amounts (3% in Gordon County) SPLOST – Special Purpose Local Option Sales Tax Collected by: State & Local Sales Tax in Gordon County is 7% - 4% comes from the state sales tax plus a2% county sales tax (permanent) and a 1% SPLOST that must be passed by voters every few years. Another side note is that the state does not collect sales tax on groceries and medicine, but the county does. So if you go to Kroger and buy some groceries and cleaning supplies, a 3% tax is charged on the food and a 7% tax on the cleaning supplies. Unless it is hot or prepared food, and then it is a 7% tax. Confusing.

Property Tax Annual tax on the value of one’s property (land, house) Millage rate – the percentage tax on the value of one’s property Collected by: State & local Everyone pays the same property tax rate – but if the property is worth more, the amount of the tax is higher. A rough idea of the amount – in Gordon County a $150,000 home will have about $1700 in property taxes a year.

Licenses a permit from the government to own or use something, do a particular thing, or carry on a trade  Drivers, gun licenses, hunting & fishing Business License & Alcohol permits Job licensing – teachers, doctors, lawyers, hair stylists, contractors…. Collected by: State & local government