1. Activity Tuesday, August 28, 2012

2. No Air Lets have a few people share what they had Where is you no-air-place? What are your needs that you have? What are your wants? Lets have a few people share what they had Where is you no-air-place? What are your needs that you have? What are your wants?

3. Taxes “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes” Who said it? “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes” Who said it?

4. Benjamin Franklin

5. Taxes Initially, taxes were paid by the poor to support the rich In the USA, in many cases the taxes are paid by property owners and working people as well as businesses to support a variety of people Initially, taxes were paid by the poor to support the rich In the USA, in many cases the taxes are paid by property owners and working people as well as businesses to support a variety of people

6. History Ancient Egypt - First dynasty of the Old Kingdom 3000-2800BC Tithe - 10-20% goes to the Pharoah Even seen in the Bible/Pentateuch/Torah Corvee` - Forced labor for those unable to tithe Ancient Egypt - First dynasty of the Old Kingdom 3000-2800BC Tithe - 10-20% goes to the Pharoah Even seen in the Bible/Pentateuch/Torah Corvee` - Forced labor for those unable to tithe

7. History Around 500BC the Persian Empire start their own tax system Darius I the great Each ‘state’ was responsible for a set amount of tax Collection depended on the ‘states’ to collect from its people Around 500BC the Persian Empire start their own tax system Darius I the great Each ‘state’ was responsible for a set amount of tax Collection depended on the ‘states’ to collect from its people

8. What is tax? Tax comes from the Latin word “Taxo” which can mean “I touch” or “I estimate” A pecuniary burden laid upon individuals or property owners to support the government...a payment exacted by legislative authority ~ according to Wikipedia Tax comes from the Latin word “Taxo” which can mean “I touch” or “I estimate” A pecuniary burden laid upon individuals or property owners to support the government...a payment exacted by legislative authority ~ according to Wikipedia

9. In other words Taxes are monetary They are mandatory Mandated by a government Failure to comply violates law Taxes are monetary They are mandatory Mandated by a government Failure to comply violates law

10. Types of taxes Accounts Receivable Building Permit Capital Gains CDL License Cigarette Corporate Income Court Fines Accounts Receivable Building Permit Capital Gains CDL License Cigarette Corporate Income Court Fines

11. Types of Taxes Dog License Federal Income Federal Unemployment Fishing License Fuel Permit Gasoline Gift Dog License Federal Income Federal Unemployment Fishing License Fuel Permit Gasoline Gift

12. Types of Taxes Hunting License Inheritance Inventory tax IRS Interest Charges IRS Penalties Liquor Local Income Luxury Hunting License Inheritance Inventory tax IRS Interest Charges IRS Penalties Liquor Local Income Luxury

13. Types of Taxes Marriage Medicare Payroll Property Real Estate Recreation Vehicle Road Toll Booth Marriage Medicare Payroll Property Real Estate Recreation Vehicle Road Toll Booth

14. Types of Taxes Road Usage Sales School Septic Permit Service Charge Social Security State Income Road Usage Sales School Septic Permit Service Charge Social Security State Income

15. Types of Taxes State Unemployment Telephone Federal excise Federal universal federal, state, local surcharge minimum usage surcharge Usage Charge State Unemployment Telephone Federal excise Federal universal federal, state, local surcharge minimum usage surcharge Usage Charge

16. Types of Taxes Toll bridge Toll Tunnel Traffic Fines Trailer registration Utility Vehicle Watercraft registration Toll bridge Toll Tunnel Traffic Fines Trailer registration Utility Vehicle Watercraft registration

17. Types of Taxes Well Permit Workers Compensation Well Permit Workers Compensation

18. Types of taxes Get the point???

19. Some Specific Taxes Payroll Taxes Come out of paycheck Federal and state, sometimes local Usually at a rate of 15.3% Social Security only applies to the first $106,800 Payroll Taxes Come out of paycheck Federal and state, sometimes local Usually at a rate of 15.3% Social Security only applies to the first $106,800

20. Some Specific Taxes Property taxes Based on fair market value of property imposed generally on realty not typically on businesses Rates are different depending on the area Property taxes Based on fair market value of property imposed generally on realty not typically on businesses Rates are different depending on the area

21. Some Specific Taxes Sales Taxes imposed on the price at retail sale of goods and services state and localities KY = 6% Harrodsburg =.5% on restaurant Sales Taxes imposed on the price at retail sale of goods and services state and localities KY = 6% Harrodsburg =.5% on restaurant

22. Some Specific Taxes Tariffs/customs duties must be paid before being imported from 0-20% based on country Estate/Gift from inheritance or donations Tariffs/customs duties must be paid before being imported from 0-20% based on country Estate/Gift from inheritance or donations

23. Tax Rates Most taxes are based on percentages Effective Rate Total taxes paid / total dollars Marginal rate the percentage paid on the next dollar Most taxes are based on percentages Effective Rate Total taxes paid / total dollars Marginal rate the percentage paid on the next dollar

24. Effective Rate If I pay $3493.54 in income tax I made $25,456.43 My effective rate is 3493.54 / 25,456.43 = ? Which would be 13.7% If I pay $3493.54 in income tax I made $25,456.43 My effective rate is 3493.54 / 25,456.43 = ? Which would be 13.7%

25. Marginal Rate 5% for the first 50k 10% for the second 50k 15% for the third 50k I make 126,658.19.05(50,000)+.1(50,000)+.15(26,658.19) The marginal rate is 15% because the next dollar I make is taxed at a 15% rate 5% for the first 50k 10% for the second 50k 15% for the third 50k I make 126,658.19.05(50,000)+.1(50,000)+.15(26,658.19) The marginal rate is 15% because the next dollar I make is taxed at a 15% rate

26. Marginal Rate If I still have the same problem:.05(50,000)+.1(50,000)+.15(26,658.19) $11,498.73 dollars paid in taxes Tax Rates: Marginal = 15% Effective = 9.1% If I still have the same problem:.05(50,000)+.1(50,000)+.15(26,658.19) $11,498.73 dollars paid in taxes Tax Rates: Marginal = 15% Effective = 9.1%

27. Exercises Using the same taxes: 5% on first 50,000 10% on the second 50,000 15% on the third 50,000 20% on the fourth 50,000 Using the same taxes: 5% on first 50,000 10% on the second 50,000 15% on the third 50,000 20% on the fourth 50,000

28. Exercises Find the marginal and effective tax rates for the following amounts. 154,394.95 23,499.71 55,273.62 94,364.55 141,934.17 Find the marginal and effective tax rates for the following amounts. 154,394.95 23,499.71 55,273.62 94,364.55 141,934.17

29. Flat Rate Taxes These taxes would be something like sales tax Sales Tax = 6% If I go to the store and spend 659.14 my tax would be: 659.14 x 0.06 = 39.55 Total will be 659.14 + 39.55 = 698.69 These taxes would be something like sales tax Sales Tax = 6% If I go to the store and spend 659.14 my tax would be: 659.14 x 0.06 = 39.55 Total will be 659.14 + 39.55 = 698.69

30. Exercises Find the taxes and the total for each retail value provided given a 6% tax 768.98 163.56 67.98 50.07 37,864.50 Find the taxes and the total for each retail value provided given a 6% tax 768.98 163.56 67.98 50.07 37,864.50