Proportional Tax- A tax for which the % of income paid in taxes remains the same for all income levels Also called a flat tax, everyone pays the same.

Proportional Tax- A tax for which the % of income paid in taxes remains the same for all income levels

Also called a flat tax, everyone pays the same rate

Example: Some state income taxes are the same rate for every taxpayer

Progressive Tax- A tax for which the % of income paid in taxes increases as income increases

As people make more, a larger % is taken for federal taxes

Those who make less than the minimum pay no fed. Tax

Example: Federal personal income tax

Regressive Tax- A tax at a flat rate without regard to the level of a taxpayers income or ability to pay

The tax takes a larger % of lower incomes than higher incomes

Falls hardest on those with lower income Example: State sales tax on food (not in

Ohio)

Direct- A tax that cannot be shifted to another

Example- income and property taxes

Indirect- Tax that increases the price of a good so consumers are paying more for the products

Example- fuel and cigarette taxes

Gross pay- total salary before deductions are taken out

Net pay- amount of pay after taxes and deductions are taken out

Deductions- money taken out for retirement and medical/dental plans

Taxes taken out- Federal, State, City/Local Social Security- Fed. Program to help

unemployed, disabled, over 65 Medicare- Fed. Health insurance 65 and over

401(k)- Investment toward a employee’s retirement

No taxes paid until the money is taken out

Mutual fund- investments where one trades in securities like stocks and bonds