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As with most things in economics, taxation is a mixed blessing. It is a blessing for those who receive dollars from taxpayers, which is about 40% of the population; and it is a nuisance for those who have to pay the taxes. The objective of this unit is to help you understand taxes and understand how they affect your life and the economy. The income tax system began in earnest in 1913 with the Sixteenth Amendment to the Constitution that gave Congress legal authority to tax income. A rudimentary income tax system was tried during the Civil War but was eventually declared unconstitutional. There was no income tax during the high watermark of America's industrial capitalism, beginning in about 1870 and continuing to 1910. If you made money in that era, you kept it. Many of the most famous capitalist names emerge from this era: Rockefeller, Carnegie, McCormick, Swift, and Vanderbilt. Two major disasters in our economic history, the Great Depression and World War II, changed the role of taxation and government forever. Beginning in the mid-1930s, following the ideas of John Maynard Keynes, the U.S. government began to spend money much more aggressively. In the past, government believed mostly in a balanced budget, but that changed when the Great Depression lingered for an entire decade. Later, to finance a two-front, world war, taxes were raised to about 90%. Thus began the era of big taxes to pay for big government. Taxes, of course, have fallen from that lofty peak to a more modest 35% marginal tax rate at present, but the number of taxes has increased exponentially. All but six states have an income tax; likewise, many counties and cities have an income tax. Though there are many ways to slice the tax onion, perhaps the best is the following: Progressive taxes: This is a tax system in which tax rates increase as income increases. In other words, the more money you make, the more taxes you pay. This system places a greater burden on those best able to pay and almost no burden on the poor. For example, according to Internal Revenue Service (IRS) statistics, the top 50% of earners pay 97% of the taxes. The top 1% of earners pays 30% of all income taxes. On the other hand, over fifty million people, or one-third of the adult population in the United States, pay no taxes whatsoever. Regressive taxes: In theory, these are the opposite of progressive taxes; these tax strategies fall more heavily on the poor. Common sense would suggest that these would be rarely used in a well-organized economy, but in fact, they are among the most commonly used because of their relative invisibility. Sometimes called the nickel and dime tax, regressive taxes tend to be small for each individual event; therefore, they are not widely noted. A good example of a regressive tax is the sales tax. It takes a much larger percentage of a poor person’s income than the income of someone of wealth. The reason there is no protest is that it takes such a small amount of money on ...
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Economic regulations help fulfill Adam Smith’s idea of a laissez faire economy. true false One of the main reasons for increasing economic regulations in the United States is the increasing population. true false Increasing the discount rate in order to decrease the money supply is an example of fiscal policy. true false In a recession, fiscal policy calls for the government to decrease taxes and increase spending. true false Monetary policy alone is the most effective economic policy. true false When the Federal Reserve sells government securities, it results in a decrease in the money supply. true false Which of the following is a function of our current banking system? lending money acting as a medium of exchange regulating the money supply determining the value of money The purpose of economic regulations in the United States is to undermine the free-market economy limit the individual freedoms of all Americans promote economic growth, stability, and equity control population growth and birth rates The Department of Defense is an important part of the economy because it provides consumers and businesses with protection and a sense of security when making economic decisions it protects human health and the environment so consumers and businesses will be safe it develops military strategies during times of war it provides banking insurance so depositors’ money is protected when it is placed in bank accounts The Environmental Protection Agency (EPA) impacts the economy by developing and enforcing regulations that protect human health and the environment providing consumers and businesses with protection and a sense of security when making economic decisions providing banking insurance so depositors’ money is protected when it is placed in bank accounts creating and enforcing truth-in-advertising laws to protect consumers Crazy Eight is very excited because he is opening a new business. He purchased a building, equipment, a license, and computers, and he remodeled his building. He also was able to acquire a patent for his new idea. He invested all his savings in the new business and he is hoping his new business will take off. Crazy Eight was able to open this new business because he is leasing the building from the government under an agreement he will manufacture what the government orders the government guarantees he is able to own property and ideas he is a good businessman and will succeed he is able to bypass all the government regulations in order to open an illegal business John Furry purchased a vacation package from a telephone solicitor. The person asked John for a two-hundred-dollar deposit via credit card in order to reserve his package. John gave the solicitor his credit card number, but he never received the vacation. The agency responsible for investigating this fraud is the Environmental Protection Agency the Consumer Product Safety Commission the Food and Dr.
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SEO Case Study: How I Increased SEO Traffic & Ranking by 50-60% in 6 Months
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