1. Government Sources of Revenue Taxes
AGENDA (Wednesday: April 26th)
Taxes Questions
Taxes – Notes
Evaluate two families and the taxes they pay
STUDENTS CAN…
Identify the principles of taxation; Identify the three types of taxes; and apply concepts of taxation to analyze two different families experiences with taxes

2. What have you heard about taxes?
Too High?
Too Low?
Not “Fair”?
Not Efficient?
Confusing?
WHAT KIND OF TAXES HAVE YOU PAID?

3. AGREE OR DISAGREE?
“People with higher incomes should pay a higher percentage of their income in taxes than people with lower incomes.”
STRONGLY STRONGLY
Disagree Agree

5. Fiscal Policy: Taxing and Spending to stimulate economic growth
Producing more public goods
Hire more labor,
 Households get more income
Buy more goods/services
BOOST the economy.
THINK about the “Circular Flow Chart”

6. Justification for types of taxes (IS IT A JUSTIFIED TAX?)
2 justifications for taxes:
Raising revenue to provide the service demanded
A fee you pay to the government for something you demand
EXAMPLES:
Post office  Mail
Gas Tax  Roads

7. Justifications for Types of Taxes
2. Influence the behavior of citizens (“sin” taxes”)
NEGATIVE Examples: Tobacco and Alcohol have proven to be detrimental to health. You don’t HAVE to smoke!
Those who smoke and drink get sick more often and don’t have health insurance to pay for medical bills.
OR POSITIVE (Tax Breaks/incentives): Home interest The government wants people to own homes for economic growth

8. “Principles of Taxation” (Who pays the tax and How much?)
2 Ways to decide:
Ability to Pay (pay tax because you can afford to pay)
People taxed on their ability to pay, regardless of benefits received
Examples: Property Tax, Income Tax

9. “Principles of taxation”
Benefits Received (pay tax or fee in direct exchange for something provided by the government)
Whoever benefits from a good/service pays in proportion to the benefit received
EXAMPLE: Gasoline Tax, Tobacco Tax, User Fee, Toll Road
Government built the road, you only pay for it if you use it.
Seems more fair, BUT could every single good be done this way?
NO! How about Food Stamps????

10. Category/Types of Taxes
3 Different Types of Taxes
Progressive Tax:
The more money you make, the higher (more) tax you pay (typically a percentage)
Example: U.S. Income Tax
Matches up with ABILITY TO PAY
Different “Tax Brackets”
People try to have “write offs” to get a lower percentage
PEOPLE at the bottom have more money to spend, people at the top still have plenty of money to spend.

11. Category/Types of Taxes
Regressive Tax:
The lower the income/wealth you have, the higher tax you pay.
Everyone pays the SAME Dollar amount:
Drivers license fee (FLAT RATE)
Sin taxes are Regressive Taxes
Lottery:
Flat $ fee
Low income people PLAY THE LOTTO! They beg for it!
BENEFIT RECEIVED A chance to win!!! $

12. Category/Types of Taxes%
Proportional Tax:
Everyone pays the same % in taxes
Does NOT mean the same dollar amount
EXAMPLE: Sales tax, State income tax, FICA: Medicare/social security (Payroll taxes)

13. What makes a GOOD TAX?
Simple: enough for people, businesses and tax-collectors to understand
Efficient: Should be easy to administer and successful at GENERATING REVENUE
Equity: Should be Fair and Just

14. Let’s evaluate two families “the Millers and the Carpenters”
What type of tax are they paying?
Progressive, Regressive, or Proportional
What principle is the tax representing?
Benefit Received or Ability to Pay
Evaluate the fairness, effectiveness, and simplicity of each tax
Then work on the “Types of Taxes Chart”

15. Government Sources of Revenue Taxes
AGENDA (THURSDAY: April 27th)
Graphing Taxes (Notes)
Incidence of the tax – graphing questions
Discuss Millers/Carpenters and Tax Assignment (chart)
Finish CH 9.1 and 9.2 reading guide
STUDENTS CAN…
Identify the principles of taxation; Identify the three types of taxes; and illustrate graphically the incidence of the tax

16. EXCISE TAXES An excise tax is a tax on sales of a good or service.
Per Unit Tax AND INCLUDED in the price…
Excise taxes:
raise the price paid by buyers.
reduce the price received by sellers.

17. Incidence of the Tax… who pays?

18. Deadweight Loss Caused by a Tax
SUPPLY with TAX
Price
SUPPLY = MSC
2.50
Per-unit Tax
2.00
1.50
1.00
0.50
DEMAND = MSB
Quantity of Soda 53

19. Graphing Activity
WHO PAYS?
How much?

20. Taxation Videos
How Companies avoid taxes
Robert Reich (Raising Taxes on the wealthy)
Is America’s tax system fair?
Tale of three brothers