1. Taxes!!!!

2. Required payment to a local, state or national government
Government uses the revenue from taxes to provide goods and services
What is a tax

3. Types of tax
Progressive
Proportional
Regressive

4. Progressive tax
A tax for which the percentage of income paid, increases as income increases
Ex: federal income tax

5. Proportional tax
Tax which the percentage of income paid remains the same at all income levels

6. Regressive tax
Tax which the percentage of income paid decreases as income increase
EX: SALES TAX

7. Characteristics of a good tax
Simplicity: Tax laws should be simple and easily understood
Efficiency: Gov. should be able to assess and collect tax without spending to much time and money
Certainty: Should be clear when tax is due, how much it cost and how it should be paid
Equity: should be fair (no one bears to little or to much of the burden)

8. Determining if a tax is fair
2 principles
Benefits received: a person should pay based on level of benefits they expect to receive from the gov. (ex pay a gas tax if you drive to maintain roads)
Ability to pay: people should pay taxes based on their ability to pay (ex: progressive tax)