Your SlideShare is downloading. ×
Ch. 9 Taxes
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Ch. 9 Taxes

1,601

Published on

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,601
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
37
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Taxes
  • 2.
    • What is the decision being made in this cartoon?
    • Are these two things controllable?
  • 3. Economic Impact of Taxes
    • Taxes and other forms of govt. revenue influence the economy by affecting
      • Resource allocation
      • Consumer behavior
      • National productivity and growth
  • 4. Resource Allocation
    • Taxes are directly related with the movement in the market.
    • They are levied on goods/services and production.
    • This directly affects supply, demand, and equilibrium price.
  • 5. Behavior adjustment
    • Taxes are used to either help out or punish consumers
      • Homeowners get tax breaks on mortgages
      • Sin taxes are levied on alcohol, tobacco, etc.
  • 6. Productivity and Incidence of Tax
    • Taxes affect productivity because of the taxation of income.
    • They change the incentives to save, invest, and work.
    • The final burden of the tax can be measured by supply and demand.
    • It is much easier for the producer to shift the burden of the tax to the consumer.
  • 7. The Criteria for Effective Taxes
    • Equity- Fairness is so important for effective taxes. The goal is to try and avoid loopholes so everyone gets to pay a fair share.
    • Simplicity- Laws should be written so both the payer and tax collector can understand them.
      • Individual income tax-complex
      • Sales tax- simple
  • 8.
    • Efficiency-should be relatively easy to administer and reasonably successful at generating revenue.
      • Individual income tax—very efficient
      • Tall taxes are not so efficient.
  • 9. Two Principles of Taxation
    • Benefit Principle—Those who benefit from govt. goods should pay in proportion to the amount of benefits they receive.
    • Ability to Pay—people should be taxed according to their ability to pay, regardless of the benefits that they receive.
  • 10. Types of Taxes
    • Proportional tax- imposes same percentage rate of taxation on everyone.
    • Progressive tax- imposes a higher tax on people with higher incomes.
    • Regressive tax- imposes higher rate on low incomes.
  • 11. Individual Income Taxes (Fed.System)
    • The 16 th amendment allows Congress to levy taxes.
    • Govt. collected nearly 45% of its income from individual income tax.
    • It is paid through payroll deduction over time.
    • It is a progressive tax and has a provision for indexing. Indexing keeps workers from paying more in taxes due to inflation.
  • 12. FICA
    • Employers and employees share the burden of paying these taxes.
    • You see a deduction in your check for both Medicare and Social Security.
    • Social Security is a 6.2% flat tax rate.
    • Medicare is taxed at a 1.45% rate.
  • 13. Other Federal Taxes
    • Excise Tax is levied on things like gas and liquor.
    • Estate taxes are levied when property is transferred form one individual to another.
    • Gift taxes are made on donations, the giver is the person responsible for this tax.
  • 14. Corporate Tax and Duty
    • Corporations have to pay taxes on income and this accounts for the third largest category of taxes.
    • Customs duties are levied on goods brought into the United States.
    • About 1% of federal revenue is collected through miscellaneous fees.
  • 15.
    • Who is this man working for?
    • What is this cartoon saying about the government?
    • How is irony incorporated in this cartoon?
  • 16. State Govt. Revenue sources
    • Intergovernmental revenue is the largest form of state revenue. This is funds collected by one level of govt. and redistributed to another level.
    • Sales taxes are the second largest form of state revenue.
    • Other forms of revenue comes various state supported sources such as university tuitions, interest earnings, etc.
  • 17. Local Government revenue
    • Local govts. receive the largest part of their revenue from intergovernmental revenues. Intended for education/welfare.
    • Property taxes raise a significant amount of revenue for local govt.
    • Public utilities and state owned liquor stores raise the third largest form of revenue for local govt.
  • 18. Tax Reform
    • Tax reform (1981)—Reagan proposed the Economic Recovery Tax Act to reduce taxes for many business owners.
    • Businesses received tax relief in the form of accelerated depreciation which allowed a reduction in federal income tax payments.
    • They also received tax credits on investment.
  • 19. Tax Reform (1986, 1993)
    • In 1983, more than 3,000 millionares paid no income tax.
    • Congress passed a tax reform that reduced brackets to two.
    • Added surcharge to tax higher income more.
    • Govt. spending was high.
    • Omnibus Budget Reconciliation Act was passed so the govt. could balance the budget.
    • Added two more marginal brackets.
  • 20. Tax Reform in 1997 and 2001
    • Taxpayer Relief Act was passed to help out many individuals.
    • Taxes were cut across the board due to a high surplus in revenue.
    • Added a 10% bracket and lower the percentile for the top two brackets.
    • High child tax credits were added as well.
  • 21. The Value Added Tax
    • People want to shift the tax from income to consumption.
    • (VAT) is placed on the value added to each stage of production.
    • Production of g/s would be taxed as the product is passed from producer to consumer.
  • 22. Advantages vs. Disadvantages
    • Hard to avoid because the tax collector levies on total amount of sales less the cost of inputs.
    • Is widely spread
    • Easy to collect
    • Would affect people’s behavior.
    • Is invisible to consumer.
    • Would compete with state sales taxes.
  • 23. Advantages vs. Disadvantages of Flat Tax
    • Simplicity offered to taxpayer.
    • Closes most loopholes
    • Reduces the need for tax accountants.
    • Removes many of the behavior incentives already built into tax code.
    • No one knows exactly what rate is needed to replace the revenues already collected from the current system.

×