1. Notebook # 29 Economics 9-2 The Federal Tax System Pages 231-236

2. The Federal Tax System ESSENTIAL QUESTION: How does the U.S. acquire revenue (money) in order for the government to operate? Why is the federal individual income tax a progressive tax based on income level? Why should people be taxed based on their ability to pay taxes? What are some other sources of government revenue? Pages 231-236

3. The Economics of Taxation Pages 231-236 GPS STANDARDS : SSEPF3- Explain how changes in government monetary and fiscal policy can have an impact on an individual’s spending and saving choices. b.) Define ( and explain the impact) of progressive…. taxes

4. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 The federal government raises revenue from a variety of taxes The most important sources of government revenue are individual income taxes, Social Security taxes, and corporate income taxes.

5. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 The Federal government collects about 48 percent of its revenue from the individual income tax. Taxes are typically withheld from individual’s paychecks, with employers sending the taxes directly to the Internal Revenue Service.

6. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 Individuals file a tax return on or before April 15 each year; if taxes withheld are more than the taxes owed, the individual receives a refund; if not, the individual makes a payment of the tax balance.

7. Economics 9-2 l l The Economics of Taxation l l Pages 231-236

8. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 The individual income tax is a progressive tax because individuals earning higher incomes pay higher tax rates.

9. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 Why do you think some Americans call the Social Security tax the “tax of the middle and lower classes? It is a partly regressive tax, these economic classes bear more of the burden of Social Security taxes than the wealthy class.

10. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 The Federal Insurance Contributions Act (FICA) tax pays for Social Security and medicare. FICA it is the second largest source of government revenue.

11. Economics 9-2 l l The Economics of Taxation l l Pages 231-236 Corporations pay a tax on their profits because they are considered legal entities. Corporations tax is the third largest source of government revenue.

12. p. 231-236