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TAX BASES & STRUCTURES
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Most Common Tax Bases Individual income tax Corporate income tax Sales tax Property tax
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Individual Income Tax Tax based on an individual’s income from all sources
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Corporate Income Tax Tax based on a corporation’s profits
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Sales Tax Tax based on the value of goods or services at the time of sale. http://www.tax.ny.gov/pdf/publications/sales/pub718.pdf http://www.earthodyssey.com/sales_tax.html
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Property Tax Tax based on the value of an individual’s or business’s assets, generally real estate.
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Proportional Tax Takes the same % of income from all taxpayers regardless of how much they make “FLAT TAX”
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Progressive Tax Places a higher % rate of taxation on higher-income earners The Federal Income tax
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Regressive Tax Takes a larger % of income from people with lower incomes SALESPROPERTY
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Why tax incentives? The gov’t may encourage behavior that it believes is good for the economy and for society http://thehotellafayette.com/
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What is a sin tax? Taxes imposed on products or activities considered to be unhealthful or damaging to society
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Withholding Money taken from a worker’s pay before the worker receives it Also called the payroll tax
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Ability-to-pay Principle People with higher incomes not only pay more in total taxes but also pay a higher percentage of their income in taxes
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National Debt
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What is national debt? The total amount of money that the government owes National Debt = Sum of annual budge deficits – any budget surpluses or other payments against the debt Current Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding 12/31/1211,581,517,550,395.074,851,212,500,174.0516,432,730,050,569.12
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$16,439,519,291,252.22 The estimated population of the United States is 314,176,428, so each citizen’s share of this debt is $52,325.75! The National Debt has continued to increase an average of $3.86 billion per day since Sept. 28, 2007! http://www.brillig.com/debt_clock/faq.html
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What is deficit spending? A government spends more than it collects in revenue
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How is money raised for deficit spending? Treasury Bills – mature in less than 1 year Treasury Notes – mature in 2-10 years Treasury Bonds – mature in 30 years Trust Funds – S.S., medicare, medicaid Interest paid on all w/ higher interest rates on those with longer maturity dates
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In 1981 national debt was _______% of GDP (______% privately owned) In 2006 national debt was _______% of GDP (less than _______% privately owned) 33 80 68 60
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Effects of Debt POSITIVE When government spends to stimulate the economy NEGATIVE Gov’t competes w/ the private sector for investments With more debt, the gov’t is just repaying interest
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Top 10 U.S. Creditors China $906.8 billion Japan $877.4 billion England $477.6 billion Oil exporters (OPEC) $213.9 billion Brazil $177.6 billion Hong Kong $139.2 billion Caribbean banking centers $133.7 billion Russia $131.6 billion Taiwan $131.2 billion Canada $125.2 billion
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The following are the top ten creditors to the USA as of March, 2009: (Amt. in Billions) 1.China 767.90 2 2.Japan 686.70 3 3.Caribbean Banking Centers 213.60 4 4.Oil Exporters 192.00 5 5.Russia 138.40 6 6.United Kingdom 128.20 7 7.Brazil 126.60 8 8.Luxembourg 106.10 9.Hong Kong 78.90 10.Taiwan 74.80
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