TAXES

3 TYPES – HIGHLIGHT ON PAGE 9Highlight every TAX term on the page in your workbook

Take notes on page 8 and then fill out the bottom of page 9

Fill out pages 7, 12Get a stamp on 7, 12

PAGE 8 > DIVIDE YOUR PAPER INTO A 4 SQUAREBasics-Why

-Limits

-Tax structure

-FICA, etc…

-Collectors

Federal Taxes-Individual

-Corporate

State Taxes and spending Local Taxes and limits

THE BASICSWhy can the Government collect

taxes?Article I Sec 8, clause 1 of the US ConstitutionFor the general welfare and common defense.

Why do we need to collect taxes?Communities need money

What happens if you don’t pay?fines and/or jailIf you file for Income Tax extension you are

still paying interest from April 15 on all you owe.

LIMITATIONSNot fair for individual interests

Federal taxes must be the same in every state

NOT collected on exportsfrom religious and other groups (tax exempt)

TAX STRUCTURESTaxes are collected on

IncomesPropertyGoods and Services

WHAT IS FICA?Federal Insurance Contributions ActThis Tax funds social security and MedicareTax 7.65% of incomes up to

$76,200, (any earning above is amount are not taxed).

Must pay in for 10 years to receive benefits

A Regressive Tax

WHO COLLECTS TAXES?IRS

Internal Revenue Service-part of the US Dept. of Treasury

Criticisms: Negative attitude/scare tactics, guilty until proven innocent, too many rules, information is hard to understand,

They give wrong information at times when you call them.

FEDERAL TAXES – INDIVIDUAL V CORPORATEIndividual Income Tax-

Legalized by the 16th amendmentPay as you earnFiling due April 15th for the previous year

6 brackets for taxing by income:10%, 15%, 25%, 28%, 33%, 39.6%

Is a Progressive Tax

CORPORATE INCOME TAXESCan /write off many expenses

15-39% of income for the corporation

A Progressive Tax

OTHER FEDERAL TAXESUnemploymentExcise TaxesImport Taxes (tariffs) and customs duty

STATE TAXES AND SPENDING Spending and Budget

Operating budget Budget for day-to-day spending.

Salaries and Supplies.Revenue (Taxes)-

Sales tax State income tax Corporate income tax Licensing fees (teacher, doctor)

TAXESLimitations

No taxing federal property or institutions

No taxing exportsNo taxing non-profits or religious groups

How Spent?Education, public safety, highways, public welfare, art & recreation.

LOCAL GOVERNMENT TAXES AND SPENDING

TaxesProperty Taxes

where local governments get the most money

City TaxRental Tax

SpendingEducation, police and firemen,

public health, elections, record keeping.

3 TYPES – HIGHLIGHT ON PAGE 9Highlight every TAX term on the page

Answer questions 1-4 on page 9.

Proportional-percent paid is the same for all income levels Progressive: percent of taxes paid increases as income increases Regressive-percent of taxes paid decreases as income increases