Taxes Grab a card and don’t show anyone. Are you going to cooperate with voluntary compliance? Each card represents a part of your income. Each card represents.

TaxesTaxes

Grab a card and don’t show Grab a card and don’t show anyoneanyone

Are you going to cooperate Are you going to cooperate with voluntary compliance?with voluntary compliance?

Each card represents a part of your income.Each card represents a part of your income. Face cards represent cash, payments under Face cards represent cash, payments under

the table, “tax free”the table, “tax free” 2-5 represent tips i.e. a waiter, hair stylist, 2-5 represent tips i.e. a waiter, hair stylist,

parking garage attendant, etc.parking garage attendant, etc. If you pulled a 6-10 you must return it If you pulled a 6-10 you must return it

immediately. (they represent your paycheck immediately. (they represent your paycheck and you must deposit it to the bank.)and you must deposit it to the bank.)

Voluntary complianceVoluntary compliance

Let’s count the cardsLet’s count the cards How many are we missing?How many are we missing? Now, lets see how the government Now, lets see how the government

will use the taxes.will use the taxes.

Tax Revenue for HeritageTax Revenue for Heritage High School High School

Perfect WorldPerfect World Library- 5Library- 5 Textbook -5Textbook -5 Electricity/AC/Heat-Electricity/AC/Heat-

1212 Teachers- 17Teachers- 17 Admin. Classif.-8Admin. Classif.-8 Cafeteria- 5Cafeteria- 5

RealityReality Library- Library- Textbook -Textbook - Electricity/AC/Heat-Electricity/AC/Heat- Teachers-Teachers- Admin. Classif-Admin. Classif- Cafeteria-Cafeteria-

Tax TalkTax Talk

Deductibles (write offs)- Items Deductibles (write offs)- Items withdrawn from taxes i.e. charity, withdrawn from taxes i.e. charity, business expenses, etc.business expenses, etc.

Is Social Security a tax?Is Social Security a tax? What is a tax shelter?What is a tax shelter?

What are taxes?What are taxes?

A required payment to a local, state, A required payment to a local, state, or national government. Taxes give or national government. Taxes give the government money to operatethe government money to operate

There are three tax structuresThere are three tax structures Proportional- flat taxProportional- flat tax Progressive- Income taxProgressive- Income tax Regressive- Sales taxRegressive- Sales tax

Federal TaxesFederal Taxes Stats to consider:Stats to consider:

2004, the fed. Gov’t took in $1.88 trillion 2004, the fed. Gov’t took in $1.88 trillion in taxes, which is $6,300 per person.in taxes, which is $6,300 per person.

The federal government uses 6 sources The federal government uses 6 sources of tax revenue.of tax revenue.

Individual incomeIndividual income Corporate incomeCorporate income Social insuranceSocial insurance Estate and gift taxEstate and gift tax Customs dutiesCustoms duties Miscellaneous receiptsMiscellaneous receipts

Hold on… I’m coming….Hold on… I’m coming….

Withholding- taxes taken from income check…i.e. Withholding- taxes taken from income check…i.e. Federal Insurance Contributions Act (FICA), Federal Insurance Contributions Act (FICA), Medicare, SSNMedicare, SSN

Tax return – form used to file income taxesTax return – form used to file income taxes Taxable income – income on which tax must be Taxable income – income on which tax must be

paid; total income minus exemptions and paid; total income minus exemptions and deductions.deductions.

Personal exemption- set amt. that you subtract Personal exemption- set amt. that you subtract from your gross income for yourself, your spouse, from your gross income for yourself, your spouse, and any dependents.and any dependents.

Deductions – variable amt. you can deduct from Deductions – variable amt. you can deduct from gross income.gross income.More info. On page 366More info. On page 366

You’re So BossyYou’re So BossyThis is one of your employees, This is one of your employees, please determine their net-payplease determine their net-pay

HoursHours EarningsEarnings

20 200.0020 200.00

Taxable WagesTaxable Wages

200.00200.00

Description AmountDescription Amount

FICA 15.20FICA 15.20

Federal 10.25Federal 10.25

State 5.10State 5.10

City 1.00City 1.00

Total Taxes 31.55Total Taxes 31.55

Calculate net pay=Calculate net pay=

Work in pairs, study some Work in pairs, study some stubsstubs

Grab two out of the six pay stubs and Grab two out of the six pay stubs and answer the following for each stubanswer the following for each stub

1. Name of establishment1. Name of establishment 2. Gross earnings for single pay period2. Gross earnings for single pay period 3. Net earnings for single pay period3. Net earnings for single pay period 4. Amt. of FICA or Social Security4. Amt. of FICA or Social Security 5. What is the difference between year to 5. What is the difference between year to

date and current amount of one pay period?date and current amount of one pay period?

And the other……And the other……In pairs brainstorm 2 examples In pairs brainstorm 2 examples

for each.for each. Excise TaxExcise Tax

Estates TaxEstates Tax

Gift TaxGift Tax

Gasoline, cigarettes, Gasoline, cigarettes, alcoholic beveragesalcoholic beverages

Real estate, jewelry, Real estate, jewelry, paintings, insurance.paintings, insurance.

Under $11,000 a Under $11,000 a yearyear

Quick checkQuick check

1. Provide an 1. Provide an example of a example of a write offwrite off

2. What is an 2. What is an example of a example of a federal tax?federal tax?

3. Why do taxes 3. Why do taxes come directly out come directly out of your pay stub?of your pay stub?

4. What is a “tax 4. What is a “tax return?”return?”

5. What is the 5. What is the difference difference between an between an estate tax and estate tax and property tax?property tax?

H.W.H.W.See Figure 14.5 pg: 367 and See Figure 14.5 pg: 367 and

answer the questionsanswer the questions I am married and make $119,950 I am married and make $119,950

what is the amount I am taxed over?what is the amount I am taxed over?

I am single and a student at Cal Poly I am single and a student at Cal Poly and make 2,000. How much do I pay and make 2,000. How much do I pay in taxes?in taxes?

H.W.H.W.Social SecuritySocial Security

Insurance policy for old-age, Insurance policy for old-age, survivors, and Disability insurancesurvivors, and Disability insurance

Paragraph 1:Why was SSI created? Paragraph 1:Why was SSI created? Paragraph 2-3 Why is it failing? Paragraph 2-3 Why is it failing?

Provide at least two examples and Provide at least two examples and include your sources on a separate include your sources on a separate page. Use MLA format.page. Use MLA format.

Length: 3 paragraphs.Length: 3 paragraphs.