1. Types of Taxes

2. Types of Taxes
Proportional Tax- A tax for which the % of income paid in taxes remains the same for all income levels
Also called a flat tax, everyone pays the same rate
Example: Some state income taxes are the same rate for every taxpayer

3. Types of Taxes
Progressive Tax- A tax for which the % of income paid in taxes increases as income increases
As people make more, a larger % is taken for federal taxes
Those who make less than the minimum pay no fed. Tax
Example: Federal personal income tax

4. Types of Taxes
Regressive Tax- A tax at a flat rate without regard to the level of a taxpayers income or ability to pay
The tax takes a larger % of lower incomes than higher incomes
Falls hardest on those with lower income
Example: State sales tax on food (not in Ohio)

5. Other Types of Taxes Direct- A tax that cannot be shifted to another
Example- income and property taxes
Indirect- Tax that increases the price of a good so consumers are paying more for the products
Example- fuel and cigarette taxes

6. Where does your money go?
Gross pay- total salary before deductions are taken out
Net pay- amount of pay after taxes and deductions are taken out
Deductions- money taken out for retirement and medical/dental plans
Taxes taken out- Federal, State, City/Local
Social Security- Fed. Program to help unemployed, disabled, over 65
Medicare- Fed. Health insurance 65 and over

7. Before Tax Deductions
401(k)- Investment toward a employee’s retirement
No taxes paid until the money is taken out
Mutual fund- investments where one trades in securities like stocks and bonds