TYPES OF TAXES. Directions – step 1 Write a definition IN YOUR OWN WORDS for the following concepts: Progressive tax Regressive tax Proportional.

TYPES OF TAXES

Directions – step 1

Write a definition IN YOUR OWN WORDS for the following concepts: Progressive tax Regressive tax Proportional tax Income tax Estate tax Excise tax Social security Medicaid/medicare Bonds

Regressive Taxes

Percentage of taxes goes down as your income goes up

Opposite of progressive

What are the positives?

What are the negatives?

Progressive Taxes

The tax rate (percentage) is higher at for people that make more money and lower for people that make less

What are the positives?

What are the negatives?

Proportional Taxes

Same percentage for everyone

What are the positives?

What are the negatives?

Income Tax

Progressive tax Based on your tax bracket

Tax on the amount of money that you make Taxable income – tax rate = income tax

Taxable income = income – deductions If income tax < taxes paid, then you get a

tax return If income tax > taxes paid, then you owe the

government How do I figure out my income taxes? Must file by April 15th If you make over $5,000 then you must file

Excise Tax

Taxes paid when you purchase goods

What are the positives?

What are the negatives?

Corporate Tax

Taxes on the profits made by corporations

Income tax for corporations

Estate Tax

Taxes that children pay on their parents’ property after their parents die

What are the positives?

What are the negatives?

Bonds

Money the government borrows and agrees to pay back with interest at a specific time

Budget Deficit & Surplus

Deficit: when the government spends more than it makes in revenue

Surplus: when the government spends less than it makes in revenue

The goals should be balance Pg 678

Social Security

Gives money to people who are retired to disabled

Gives support to those who cannot work like they used to

What are the positives?

What are the negatives?

Medicare & Medicaid

Medicaid: helps pay for healthcare for the poor

Medicare: helps pay for healthcare for elderly people

Pg 689

What are the positives?

What are the negatives?

National Debt

More debt = more taxes The taxpayers pay the interest on the

national debt• Debt increases when

unemployment increases• Debt increases during wartime

Checks & Balances and Separation of Powers at Work Who creates the national budget?

Who approves the national budget?

Who decides how much money will be collected in taxes? Where does the process start?

Directions – step 2

Draw a picture that represents the concepts you defined in step 1

Directions – step 3

Create examples (scenarios) for each of the tax concepts EX: John had to pay the federal government

$5,000 in taxes because his father died and left John a house.