Fairness In Taxes Sahara Burton, Parris Collins, Brittany Yokely

Fairness: Ability-to-Pay V.S Benefits Received Ability to pay : You pay taxes based on what you can afford. Benefits received : people who use the goods/services should pay the taxes

Why do we need taxes? 1. government has expenses Provide public goods Redistribution of wealth Promote employment, growth, stability 2. government needs revenue to pay for expenses Government levies taxes (collects)

Tax structures 1. tax structure determines how equally the tax is paid by taxpayers 2. there are three major tax structures Progressive taxes Regressive taxes Proportional taxes 3.A tax structure is applied to a tax base Income Wealth Property Goods/services

Progressive tax Tax rate increases as income increases. Example : federal income tax Falls under the ability to pay Wealthier people pay both higher rates and tax amounts

Regressive Tax Tax rate decreases as income increases ( affects poor more) It is the opposite affect of progressive tax Tax on goods/services that are a major portion of low income peoples budgets

Proportional Tax Tax rate is the same for everyone Tax revenue will vary depending on the tax base Very simple and easy to understand

Key terms Tax base : the income, wealth, property, good or service that is being taxed Capital gains tax : tax on wealth. Such as interest, stocks. Mostly collected from high income people Property tax : a tax based on real estate and other property

Key terms cont.. Sales tax : tax on goods/services that are sold Excise/sin tax : high sales tax rates on alcohol, tobacco, and gambling. Mostly collected from low income FICA tax : tax that all US workers must pay to fund social security/ Medicare and other retirement benefit programs. Is regressive tax since it is not paid on income earned over $100k