Tax bases & structures

1. Tax bases & structures

2. Most Common Tax Bases • Individual income tax • Corporate income tax • Sales tax • Property tax

3. Individual Income Tax • Tax based on an individual’s income from all sources

4. Corporate Income Tax • Tax based on a corporation’s profits

5. Sales Tax • Tax based on the value of goods or services at the time of sale. http://www.tax.ny.gov/pdf/publications/sales/pub718.pdf http://www.earthodyssey.com/sales_tax.html

6. Property Tax • Tax based on the value of an individual’s or business’s assets, generally real estate.

7. Proportional Tax • Takes the same % of income from all taxpayers regardless of how much they make • “FLAT TAX”

8. Progressive Tax • Places a higher % rate of taxation on higher-income earners • The Federal Income tax

9. Regressive Tax • Takes a larger % of income from people with lower incomes • SALES • PROPERTY

10. Why tax incentives? • The gov’t may encourage behavior that it believes is good for the economy and for society http://thehotellafayette.com/

11. What is a sin tax? • Taxes imposed on products or activities considered to be unhealthful or damaging to society

12. Withholding • Money taken from a worker’s pay before the worker receives it • Also called the payroll tax

13. Ability-to-pay Principle • People with higher incomes not only pay more in total taxes but also pay a higher percentage of their income in taxes

19. National Debt

20. What is national debt? • The total amount of money that the government owes • National Debt = Sum of annual budge deficits – any budget surpluses or other payments against the debt

21. $16,439,519,291,252.22 The estimated population of the United States is 314,176,428, so each citizen’s share of this debt is $52,325.75! The National Debt has continued to increase an average of $3.86 billion per day since Sept. 28, 2007! http://www.brillig.com/debt_clock/faq.html

23. What is deficit spending? • A government spends more than it collects in revenue

24. How is money raised for deficit spending? • Treasury Bills – mature in less than 1 year • Treasury Notes – mature in 2-10 years • Treasury Bonds – mature in 30 years • Trust Funds – S.S., medicare, medicaid • Interest paid on all w/ higher interest rates on those with longer maturity dates

25. In 1981 national debt was _______% of GDP (______% privately owned) In 2006 national debt was _______% of GDP (less than _______% privately owned) 33 80 68 60

26. Effects of Debt POSITIVE • When government spends to stimulate the economy NEGATIVE • Gov’t competes w/ the private sector for investments • With more debt, the gov’t is just repaying interest

27. Top 10 U.S. Creditors • China  $906.8 billion • Japan  $877.4 billion • England  $477.6 billion • Oil exporters (OPEC)  $213.9 billion • Brazil  $177.6 billion • Hong Kong  $139.2 billion • Caribbean banking centers  $133.7 billion • Russia  $131.6 billion • Taiwan  $131.2 billion • Canada  $125.2 billion

28. The following are the top ten creditors to the USA as of March, 2009: (Amt. in Billions) • China 767.90 2 • Japan 686.70 3 • Caribbean Banking Centers 213.60 4 • Oil Exporters 192.00 5 • Russia 138.40 6 • United Kingdom 128.20 7 • Brazil 126.60 8 • Luxembourg 106.10 • Hong Kong 78.90 • Taiwan 74.80