1. 7 th Grade Civics Miss Smith *pgs. 299-303

2.  Income tax- tax on the earnings of individuals and businesses  The main source of revenue collected by the federal gov.  The amount each citizen pays is calculated based on how much they earn and other factors explained in the U.S. tax code

3.  Taxpayers can deduct (or subtract) a certain amount of money from their taxes for themselves and their dependents (dependents are people who rely on other people for financial support)  These amounts are called exemptions

4.  Employers take income tax out of each employees paycheck and forwards it to the government on their behalf

5.  Employers also deduct Social Security tax from paychecks  This tax is used to provide income to the retired and people with disabilities

6.  Most state and city governments also collect income tax  These tax rates are lower than federal income tax rates

7.  Based on a corporation’s profits  Profit- income a business has left after paying expenses

8.  Sales tax is collected on most products sold  Excise taxes are like sales taxes but on luxury goods

9.  Property tax- tax on the value of the property owned by a person or business  The main source of income for most local governments  Collected on real and personal property  Real property- land, buildings, and other structures  Personal property- stocks, bonds, jewelry, cars, and boats  Most public school funding comes from property taxes

10.  Estate tax- federal tax on all the wealth a person leaves  Inheritance tax is based on the portion of an estate received by an individual after the estate is divided  Gift taxes are paid on gifts worth more than $13,000

11.  Tariff- import tax on products from other countries (sometimes called a customs duty)  Regulates trade and supports the U.S. economy  Can be used to encourage American industry by making domestic products less expensive than imported products  Or can hurt American consumers by making the products they buy more expensive