1. Journal #12 How are citizens and businesses taxed in the U.S.? Think of any thing that we as citizens or business owners pay taxes for in the U.S. Feel free to discuss any ways you would add or subtract from our current taxes policy. ½ page min. response.

2. Unit 1.4 Role of Government Lesson 16 – 9c – Taxes, Taxes, and More Taxes

3. Categories of Taxation Nobody likes paying taxes Many types of taxes levied by federal, state, & local govt. 3 categories – based on how they are imposed as a % of income

4. 3 Categories of Taxation Proportional tax – takes the same percentage of income from all taxpayers regardless of how much or how little they earn – (flat tax) Progressive tax – based on the idea that those who have ability to pay more should pay a higher percentage of their income in taxes – (federal income tax) Regressive tax – one in which the proportion of income paid for taxes fall as income rises (sales tax)

5. Federal Taxes Types of federal taxes include – individual & corporate income taxes, Social Security taxes, excise taxes, & customs duties Individual income tax – on wages/salaries Corporate income tax – on profits Both individual & corporate = progressive tax Social Security taxes – paid by employees & employer – both proportional & regressive tax Excise tax = flat tax on specific product (gas) Custom duties – tax on goods entering U.S.

6. State and Local Taxes 3 important types – sales, property, income Sales taxes – fixed percentage of purchases paid on certain products Often excludes food, medicine, etc.. Property taxes – calculated as a percentage of the assessed value of property/real estate – houses, buildings, land Individual income taxes – levied not only by some states but also by some cities as well

7. Indirect Cost of Taxes Taxes have a direct cost to those who pay them – indirect cost to other citizens Ex. Big city raises sales taxes – if suburbs have lower sales taxes consumer might buy larger items there instead of the city Actually has happened in many cities in the U.S. - people go to suburbs to buy cars

8. Taxes and Your Paycheck Wage earners pay such taxes as federal & state income taxes Also Social Security are withheld from individuals paychecks Other deductions taken for unemployment & disability insurance