1. Hey, did you hear the one about…………
What are the 2 things in life you can always count on ???
Death …….
…….aaaand…….

2. Taxes
“I’m taxes.”

4. How are taxes structured?
3 types of tax structures:
1. proportional
– the percentage of income
paid in taxes remains the same for all
income levels -- “flat tax”
2. progressive
– the percentage of income paid
in taxes increases as income increases
-- example – Federal income tax

5. Progressive tax structure – Federal income tax

6. 3. Regressive
- the percentage of income paid
in taxes decreases as income increases
…example??
– sales tax
- everyone pays the same rate,
regardless of income

7. What do YOU think???
…should income tax be proportional, regressive, or
progressive??

8. Activity………
……”A Taxing Argument”

9. Activity …..do the math…. “Richard and Phoebe” worksheet
…like this… = x … cross multiply….
25,

10. What are the major types of taxes?
1. Personal income tax
determined on annual basis
withholding - $ taken out of paychecks based on estimate of what will be owed
if more $ is withheld than owed, refund is received when taxes are filed

11. if not enough $ is withheld, $ will be owed
taxable income = gross income minus
exemptions and deductions
exemptions –
- set amounts subtracted
for yourself, spouse,
& dependants

12. deductions – variable amounts deducted from gross income
- includes interest on mortgage, charity, etc
Personal income taxes make up close to 50% of Federal revenue

13. personal income tax =
a progressive tax

14. 2. Corporate income tax businesses can take many deductions
makes up about 15% Federal revenue
progressive tax

15. Who the heck is Fica, and why is he getting so much of my money????
Federal Insurance Contributions Act
3. Social Security and Medicare tax
- Social security – OASDI …
…Old Age Survivors Disability Insurance
- Medicare – health insurance for 65 & older
- income cap $102,000
$106,800
- regressive tax

19. ……Taxes and more taxes…..
4. Excise tax
- tax on the sale or manufacture of a good
- gasoline, cigarettes, alcohol, telephone, cable, etc
- tax incentive – use of taxation to
encourage or discourage behavior
……”sin tax”
- regressive tax
5. Estate & gift taxes

20. estate tax – on value of money & property of a
person who has died
gift tax – on money or property one living person
gives another
progressive taxes – rate increases as value
increases

21. 6. Property taxes
- local gov’t tax
- based on value of property
- usually fixed dollar amount per $1000
assessed value
- regressive
7. Sales tax
- state & local

22. Federal revenue - 2007 $1.1 trillion - Individual income tax
$869.6 billion - Social Security and other
payroll taxes
$370.2 billion - Corporate income tax
$65.1 billion - Excise taxes
$26.0 billion - Customs duties
$26.0 billion - Estate and gift taxes
$47.2 billion - Other

24. … Ok, so where does all this money go??
$586.1 billion (+7.0%) - Social Security
$548.8 billion (+9.0%) - Defense[2]
$394.5 billion (+12.4%) - Medicare
$294.0 billion (+2.0%) - Unemployment and welfare
$276.4 billion (+2.9%) - Medicaid and other health related
$243.7 billion (+13.4%) - Interest on debt
$89.9 billion (+1.3%) - Education and training
$76.9 billion (+8.1%) - Transportation
$72.6 billion (+5.8%) - Veterans' benefits
$43.5 billion (+9.2%) - Administration of justice
$33.1 billion (+5.7%) - Natural resources and environment
$32.5 billion (+15.4%) - Foreign affairs
$27.0 billion (+3.7%) - Agriculture
$26.8 billion (+28.7%) - Community and regional development
$25.0 billion (+4.0%) - Science and technology
$20.5 billion (+0.8%) - Energy
$20.1 billion (+11.4%) - General government
2007

27. Capital and Operating Budgets
Capital Budget – expenditures on major projects and investments
Operating Budget – the day to day expenditures