1. Taxes and Fiscal Policy
Why do we pay taxes?
What gives the government the right to tax us?
What are the different types of taxes that we pay?
What does our tax money support?

2. Types of Taxes
Progressive: people with higher incomes pay a higher percentage of their income in taxes
Regressive: people with lower incomes pay a higher percentage of their income in taxes
Proportional: everyone pays the same percent of their income in taxes
What type of tax is income tax? Sales tax? Property tax? Ad Valorem tax? Customs duty? Other taxes?
How can an increase in sales tax affect different income groups?
What is the “Fair Tax” proposal?

3. Progressive Income Tax Rates 2015
10% Up to $9225 of taxable income*
15% $9226 to $37,450
25% $37,451 to $90,750
28% $90,751 to $189,300
33% $189,301 to $411,500
35% $411,501 to $413,200
39.6% $413,201 and over
*There is a standard deduction up to $6300 for single taxpayers—no tax is owed up to this amount
10%

4. Progressive Tax Rates 2014
Option A: Progressive Income Tax—People with higher incomes pay a higher marginal tax rate.
John earns $75,000 a year. Under a progressive tax rate:
He pays 0% on the first $6200 he earns-- $ X = $ 0
He pays 10% tax on the first $9,075 he earns-- $9,075 X = $
He pays 15% tax on the next $21,625 he earns-- $21,625 X = $
He pays 25% tax on the next $38,100 he earns-- $38,100 X = $
John’s total tax on $75,000 income is-- $ $ $9525 = $13,676.25
Option B: Proportional, or flat, tax—Everyone who receives an income pays the same tax rate of 19.8%
Under this plan, John would pay 19.8% of $75,000, which is …………..
$14,850

5. Taxes and Fiscal Policy
Fiscal Policy: the effort by the government to use their taxing and spending decisions to stabilize the economy.
How can fiscal policy be used to promote price stability, full employment, and economic growth?

6. Taxes and Fiscal Policy
What is the difference between a deficit and a debt?
2011 deficit: $1.5 Trillion or $1,500,000,000,000
2012 deficit: $1.1 Trillion
2013 deficit: $680 Billion
2014 deficit: $483 Billion
2015 deficit: $439 Billion
Why does the federal government have a debt?
2011 federal debt: $14 trillion ($14,000,000,000,000)
2012: $16,811,057,483,068
2013: $17,000,000,000,000
2014: $18,000,000,000,000
2015: $19,200,000,000,000

7. U.S. Federal Debt To whom is the debt owed?
43%-U.S. individuals and institutions
16%-Social Security Trust Fund
16%-China, Japan, and Great Britain
16%-all other nations
($6.06T owed to foreign entities)
9%-government retirement funds
Source: U.S. Treasury Dept., 2012