TAXES

3 T YPES – HIGHLIGHT ON PAGE 9 Highlight every TAX term on the page in your workbook Take notes on page 8 and then fill out the bottom of page 9 Fill out pages 7, 12 Get a stamp on 7, 12

P AGE 8 > D IVIDE YOUR PAPER INTO A 4 SQUARE Basics -Why -Limits -Tax structure -FICA, etc… -Collectors Federal Taxes -Individual -Corporate State Taxes and spendingLocal Taxes and limits

T HE B ASICS Why can the Government collect taxes? Article I Sec 8, clause 1 of the US Constitution For the general welfare and common defense. Why do we need to collect taxes? Communities need money What happens if you don’t pay? fines and/or jail If you file for Income Tax extension you are still paying interest from April 15 on all you owe.

L IMITATIONS Not fair for individual interests Federal taxes must be the same in every state NOT collected on exports from religious and other groups (tax exempt)

T AX S TRUCTURES Taxes are collected on Incomes Property Goods and Services

W HAT IS FICA ? Federal Insurance Contributions Act This Tax funds social security and Medicare Tax 7.65% of incomes up to $76,200, (any earning above is amount are not taxed). Must pay in for 10 years to receive benefits A Regressive Tax

W HO C OLLECTS T AXES ? IRS Internal Revenue Service- part of the US Dept. of Treasury Criticisms: Negative attitude/scare tactics, guilty until proven innocent, too many rules, information is hard to understand, They give wrong information at times when you call them.

F EDERAL T AXES – I NDIVIDUAL V C ORPORATE Individual Income Tax- Legalized by the 16 th amendment Pay as you earn Filing due April 15 th for the previous year 6 brackets for taxing by income: 10%, 15%, 25%, 28%, 33%, 39.6% Is a Progressive Tax

C ORPORATE I NCOME T AXES Can /write off many expenses 15-39% of income for the corporation A Progressive Tax

O THER F EDERAL T AXES Unemployment Excise Taxes Import Taxes (tariffs) and customs duty

S TATE T AXES AND S PENDING Spending and Budget Operating budget Budget for day-to-day spending. Salaries and Supplies. Revenue (Taxes)- Sales tax State income tax Corporate income tax Licensing fees (teacher, doctor)

T AXES Limitations No taxing federal property or institutions No taxing exports No taxing non-profits or religious groups How Spent? Education, public safety, highways, public welfare, art & recreation.

L OCAL G OVERNMENT T AXES AND S PENDING Taxes Property Taxes where local governments get the most money City Tax Rental Tax Spending Education, police and firemen, public health, elections, record keeping.

3 T YPES – HIGHLIGHT ON PAGE 9 Highlight every TAX term on the page Answer questions 1-4 on page 9. Proportional -percent paid is the same for all income levels Progressive : percent of taxes paid increases as income increases Regressive -percent of taxes paid decreases as income increases