TAXES by yurtgc548

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									   TAXES
Show me the Money!
      Thoughts on Taxes

• “Taxes, after all, are dues
  that we pay for the
  privileges of membership in
  an organized society.”
• ~Franklin D. Roosevelt
      Thoughts on Taxes

• “Taxation with
  representation ain't so hot
  either.”
• ~Gerald Barzan
      Thoughts on Taxes

• “Income tax returns are the
  most imaginative fiction
  being written today.”
• ~Herman Wouk
     Thoughts on Taxes

• “I like to pay taxes. With
  them I buy civilization.”
• ~Oliver Wendell Holmes, Jr.
          Thoughts on Taxes
• " I understand that Congress is considering a so-
  called 'flat' tax system. How would this
  work?" Answer: "If Congress were to pass a
  'flat' tax, you'd simply pay a fixed percentage of
  your income, and you wouldn't have to fill out
  any complicated forms, and there would be no
  loopholes for politically connected groups, and
  normal people would actually understand the tax
  laws, and giant talking broccoli stalks would
  come around and mow your lawn for free,
  because Congress is NOT going to pass a flat
  tax, you pathetic fool." ~Dave Barry
      Thoughts on Taxes
• Only 2 things are certain in
  Life. Can you tell me what
  they are?

• “Death and Taxes!”
• Benjamin Franklin
      I. TAX BASICS
• 1. What are the 2 most
  important things that a
  Legislative Branch does?
      I. TAX BASICS
• 1. Passing Laws to Raise
  Money and Passing Laws to
  Spend Money!
       I. TAX BASICS
• 1. Congress works in a 2-step
  process:
• Step 1 = Authorize a program
• Step 2 = Appropriate (Spend)
  Money to pay for the program.
      1. TAX BASICS
• 2. Why do the people of the
  United States pay taxes?

• BRAINSTORM
      I. TAX BASICS
• A. PRODUCTIVTY – The
  Government uses tax
  money to provide goods
  and services to help people
• EX: Schools, roads,
  hospitals, the military
      I. TAX BASICS
• B. EQUITY – The government
  uses tax revenue to
  redistribute income form the
  rich to the poor.
• Robin Hood Complex
      I. TAX BASICS
• C. ELASTICITY – The
  government uses tax revenue
  in times of crisis.
• EX: Gulf Oil Spill and
  Hurricane Katrina
       I. TAX BASICS
• 3. Any money paid to the
  government for any reason is
  a TAX.
       I. TAX BASICS
• 4. What does the US
  Constitution say about the
  power to tax?
        I. TAX BASICS
• 4. Article I, Section 8 : “The
  Congress shall have the power
  to lay and collect taxes, duties,
  imposts and excises, to pay
  the debts and provide for the
  common defense and general
  welfare of the United States. . .
        I. TAX BASICS
• 4. 16th Amendment (1909): “The
  Congress shall have the power to
  lay and collect taxes on incomes,
  from whatever source derived,
  without apportionment among the
  several states, and without regard
  to any census or enumeration.”
        I. TAX BASICS
• 5. Understand that the US
  Budget is currently running a year
  to year deficit and the national
  debt exceeds $14 trillion.
• States are also in a budget crisis
  at this time.
        I. TAX BASICS
• 6. Congress does not have
  control over all spending by the
  USA. There is no control over
  ENTITLEMENTS.
• Over 70% of the yearly US
  budget is money for
  ENTITLEMENT PROGRAMS
  where there is little discretion.
          I. TAX BASICS
• 6. An ENTITLEMENT is a required
  government expenditure that must be
  made year to year
• EX: Social Security / Medicare / Interest
  on the National Debt / Payments to
  Government contractors
   DESCRIPTION OF TAXES
• There are 3 different descriptions of the
  type of taxes used in the USA to generate
  revenue:
• PROGRESSIVE TAXES
• REGRESSIVE TAXES
• PROPORTIONAL TAXES
     PROGRESSIVE TAXES
• Any tax in which the rate rises with the
  level of a person’s income
• The % of tax increases (progresses up) as
  the person’s income increases
• Higher Income = Higher Tax rate
• EX: The US Income Tax which goes from
  a low of 10% to a high of 35%
      REGRESSIVE TAXES
• A tax rate that does not change with a
  person’s ability to pay
• A tax that impacts more severely on those
  with lower income levels – The tax takes
  more spending money form a poor
  person’s total revenue than it does a
  wealthy person
• EX: Any Fee Paid to the Government like
  a marriage license or hunting license fee
    PROPORTIONAL TAXES
• A tax where the percentage or tax rate
  stays the same regardless of how much
  money the person earns
• Like a flat tax rate
• EX: The PA Income Tax which is set at a
  rate of 3.07% for all income earners
         TYPES OF TAXES
• There are hundreds of types of taxes in
  existence today. In other words, the
  governments in our federal system find
  creative new ways to take money out of
  our pockets to pay for programs that are
  designed to help people (but may not
  achieve that goal in every case).
       1. INCOME TAXES
• A percentage that every person pays on
  their Taxable Income during a year.
• A Progressive tax (10% to 35%)
• This tax is the LARGEST source of
  REVENUE ($) for the federal government
        1. INCOME TAXES
• Taxable Income is total income –
  deductions (for dependents) and
  exemptions
• EX: PERSONAL INCOME TAX,
  CORPORATE INCOME TAX
2.SOCIAL INSURANCE TAXES
• Money the federal government collects to
  pay for major social programs to help the
  elderly, the ill and the unemployed
• An employer and employees share equally
  in this tax. The employer withholds
  (deducts) the tax from an employee’s
  paycheck and matches it. The Treasury
  Department holds the money in a special
  account under that SSN.
2.SOCIAL INSURANCE TAXES
• EX: Social Security – Govt sponsored
  retirement program and medical care for
  retired persons
• MEDICARE – Govt sponsored medical
  care program for retired persons
• UNEMPLOYMENT COMPENSATION –
  Combined federal and state program of
  financial assistance to the unemployed
        3. ESTATE TAXES
• A Federal Tax on the value of assets of a
  person at the time of their death.
• Progressive Tax
• Purpose: To redistribute wealth of families
  and individuals and To raise revenue
  without having to raise the income tax rate
        3. ESTATE TAXES
• Most people will not have to pay tax as it
  does not kick in unless you die with assets
  worth over $1 million
• Tax rate 19% to 55%
• It was eliminated by the Bush
  Administration and Congress but may be
  coming back. Many thought that it was
  DOUBLE TAXATION!
         4. EXCISE TAXES
• A Federal tax placed on the manufacture,
  transportation, sale, or consumption of
  goods or on the performance of services
• A Regressive tax
• EX: Gasoline, oil, tires, cigarettes, liquor,
  airline tickets
 5. CUSTOMS DUTIES / TARIFFS
• A federal tax levied on goods imported
  into the USA from other countries
• A Regressive tax
• Purpose: To raise revenue and TO
  protect US industries by making the
  foreign competitors goods more expensive
         6. SALES TAXES
• A state tax on the purchase of goods
  (nonnecessities)
• It is a regressive tax
• Why do this? It generates the LARGEST
  REVENUE ($) for state governments
• It is easy to collect, painless to the
  taxpayer because no return is required by
  the person
         6. SALES TAX
• The PA Sales Tax Rate is 6%

• WHAT SORT OF THINGS ARE
  SUBJECT TO THE PA SALES
  TAX?
Some folks would like it extended
  to services also
    7. STATE INCOME TAX
• A state tax that charges every income
  earner the same % of their income
• PA Income tax Rate is 3.07%
• Some states use a progressive tax and
  others like PA use a PROPORTIONAL
  Rate
        8. LICENSE TAXES
• Money paid to the states for the right to do
  things
• A REGRESSIVE TAX
• EX: Driver Licenses, motor vehicle
  registration, occupation licenses
• Which license fee brings in the most
  Revenue $$$?
     9. SEVERANCE TAXES
• A tax placed on the value of natural
  resources taking from the ground of a
  state
• Could be Progressive or Proportional
• Purpose: The natural resources came
  form the land of a state and should benefit
  the people of that state
• EX: NATURAL GAS DRILLING IN PA
   10. INHERITANCE TAXES
• Like Estate Taxes, this comes into play
  when a person dies
• It is a state tax on the value of the
  inheritance given to a beneficiary when a
  person dies
• Tax Rate varies depending on the
  beneficiaries relationship to the decedent
          11. LOTTERY
• It is state sponsored gambling.
• It is REGRESSIVE
• EX: LOTTERIES LIKE POWERBALL,
  HORSE RACING, CASINO GAMBLING,
  BINGO, JAI LAI, DOG TRACKS, ETC.
12. PROPERTY TAXES

								
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