Taxes!!!!

Required payment to a local, state or national government Government uses the revenue from taxes to provide goods and services What is a tax

Types of tax Progressive Proportional Regressive

Progressive tax A tax for which the percentage of income paid, increases as income increases Ex: federal income tax

Proportional tax Tax which the percentage of income paid remains the same at all income levels

Regressive tax Tax which the percentage of income paid decreases as income increase EX: SALES TAX

Characteristics of a good tax Simplicity: Tax laws should be simple and easily understood Efficiency: Gov. should be able to assess and collect tax without spending to much time and money Certainty: Should be clear when tax is due, how much it cost and how it should be paid Equity: should be fair (no one bears to little or to much of the burden)

Determining if a tax is fair 2 principles Benefits received: a person should pay based on level of benefits they expect to receive from the gov. (ex pay a gas tax if you drive to maintain roads) Ability to pay: people should pay taxes based on their ability to pay (ex: progressive tax)