Transcript Taxes
Stock Market Project
Please read hand out and see example
Quiz
Explain Cost Push inflation
Define Cyclical unemployment
Define Structural unemployment
What are the three phases of the business
cycle?
What are the three tools of the Federal
Reserve
What is the goal of the federal reserve?
Review
How do we measure our country’s economic growth?
GDP (Gross Domestic Product)
What kinds of goods are calculated in GDP?
Durable and nondurable, finished goods, made within US borders
What are the three economic indicators used to gauge health of economy?
Inflation, Unemployment, GDP
Why is real GDP more reliable than nominal GDP?
Real GDP using constant prices and eliminates calculation of inflation
If the winter is extra long and harsh this year, what happens to the
demand for sidewalk salt? What determinant is that?
Increases. Right shift. Expectations.
Agenda
Extended Bellringer
Announcements:
Final exam
Personal Budget Project
Notes: Tax structures
Taxes
Brainstorm
What types of things are provided to us through the use of tax money?
Military protection
Schools
Roads
Entitlement spending
Social security
Parks and recreation
Administration
Why taxes?
The ability to tax is given to the government through the US Constitution
The Articles of Confederation failed miserably in large part to the inability
to tax
As Citizens of the US, we authorize the government to levy taxes against us
for our protection and welfare. Our representatives are supposed to keep
it reasonable
Limited because of our history (revolution). Taxes must be for common
defense and general welfare. Must be the same for every state.
Three types of taxes
Tax: Required payment to a local, state, or national
government
Income tax: tax paid out of income (pay check)
Corporate tax: tax paid by business owners out of profit
Social security tax: half paid by individual from income, other
half paid by employer
“Other” taxes
Sales tax: Tax paid on purchased goods and services
Excise tax: Tax paid on certain items such as alcohol and
tobacco to discourage purchase
Property tax: Tax paid on value of property owned
Federal Insurance Contributions Act (FICA): taken from
paychecks to fund social security and medicare
Taxable Income
Gross income made from employer – deductions = taxable income
Deductions: all types! Established by government to ease burdens
Childcare costs
Head of household
Mortgage interest
Student loan interest
Capital losses
Donations to charity
Tax Structures
Proportional taxes: Percentage of income paid in
taxes is the SAME for all income levels (6% if you
make $500k or $50k)
Progressive taxes: Percentage paid INCREASES as
your income INCREASES (6% for $500k, 4% for $60k)
Regressive taxes: Income paid for taxes DECREASES
as your income INCREASES (3% for $500k, 6% for
$60k)
Rationale: those with less income will use more government services
so should pay more. Less taxes take from rich means more they will be
able to spend to stimulate economy.
Characteristics of a good tax
Simplicity
All citizens able to understand
Efficiency
Able to collect and monitor without spending too much time and money
Fairness
No one bears too much or too little of tax burden
Filing Taxes
Taxes are taken out of pay based on your income level and basic deduction
level (W-4)
In January, you receive a W-2 form from every employer you had that
states how much you made and how much money was paid in taxes for
Federal, State, Local, and FICA taxes
You (or your tax guy) calculates the taxes you are responsible for and
adjusts for any deductions. This makes sure you paid the correct amount.
If you overpaid, you get a refund. If you underpaid, you pay the difference.
Federal Budget
Exit Ticket
Progressive Tax
Structure
Proportional Tax
Structure
Regressive Tax
structure
Question: Which tax structure is the most fair in your
mind? Why?