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Video: Stossel is government too big?

Standard 2 Understand the fundamental concepts relevant to the institutions, structure, and functions of a national economy SS.912.E.2.8 Differentiate between direct and indirect taxes, and describe the progressivity of taxes (progressive, proportional, regressive).

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Video: Stossel is government too big?

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  1. Standard 2Understand the fundamental concepts relevant to the institutions, structure, and functions of a national economySS.912.E.2.8Differentiate between direct and indirect taxes, and describe the progressivity of taxes (progressive, proportional, regressive)

  2. Video: Stossel is government too big?

  3. Definitions: • Direct tax- a tax in which the payer remits the tax directly to the taxing agency • Examples- license tag, non-escrowed property taxes, tolls • Indirect tax- a tax in which the payer remits the tax through an intermediary to the taxing agency • Examples- sales tax, phone tax, payroll tax

  4. Average Tax Rate • The average tax rate equals tax liability divided by taxable income. • A progressive tax is one in which the average tax rate rises with income. • A proportional tax is one in which the average tax rate stays the same across income levels. • A regressive tax is one in which the average tax rate falls with income.

  5. Marginal Tax Rate • Marginal tax rate: calculated as the change in tax liability divided by the change in taxable income. • The marginal tax rate is highly important because it determines how much of an additional dollar earned must be paid in taxes (and therefore, how much one gets to keep). In this way, the marginal tax rate directly impacts an individual’s incentive to earn.

  6. 32000 32050 4564 4049 4564 4266 32050 32100 4576 4056 4576 4274 32100 32150 4589 4064 4589 4281 32150 32200 4601 4071 4601 4289 32200 32250 4614 4079 4614 4296 32250 32300 4626 4086 4626 4304 32300 32350 4639 4094 4639 4311 32350 32400 4651 4101 4651 4319 32400 32450 4664 4109 4664 4326 32450 32500 4676 4116 4676 4334 32500 32550 4689 4124 4689 4341 32550 32600 4701 4131 4701 4349 Marginal Tax Rate 2006 Tax Table Continued • An excerpt from the 2006 federal income tax table is shown here. If line 40(taxableincome) is And you are Single Married filing jointly Married filing separately Head of a house- hold Atleast But less than • Note, for single individuals, as income increases from $32,000 to $32,100 … Your tax is … $32,000 their tax liability increases from $4,564 to $4,589. • In this range, what is the individual’s marginal tax rate? • What is the individual’s average income tax rate?

  7. Historical marginal tax rates.pdf

  8. Tax Rate and Tax Base • Tax rate:the rate (%) at which an activity is taxed. • Tax base:the amount of the activity that is taxed. • The tax base is inversely related to the rate at which the activity is taxed. • Tax revenues:tax rate multiplied by tax base.

  9. True or False? • The top 1% of income earners pay over one-third of total IRS taxes received.

  10. Video: Stossel how much tax do the rich pay?

  11. Focus: Understanding Economics in Civics and GovernmentLesson 7 Taxes Change Behavior

  12. Mankiw(NYT)-I_can_afford_higher_taxes.pdf

  13. Video: Snooki tanning tax

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