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Warm-Up: February 10 th

Warm-Up: February 10 th. Using your supply and demand sheet from yesterday for help, make up two different supply and demand scenarios that you would experience in your everyday life. Draw an illustration for each. Why do we pay taxes?. Unit 5. Tax Terms.

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Warm-Up: February 10 th

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  1. Warm-Up: February 10th Using your supply and demand sheet from yesterday for help, make up two different supply and demand scenarios that you would experience in your everyday life. Draw an illustration for each.

  2. Why do we pay taxes? Unit 5

  3. Tax Terms • Gross Income: income before all taxes • Found in box 1 of the W2 • Net income: income after tax • Completed by taking box 1 and subtracting all taxes • Federal Income Tax: taxes paid to the federal government • State Income Tax: taxes paid to state governments

  4. IRS • Internal Revenue Service • U.S. government agency responsible for tax collection and tax law enforcement

  5. Taxes of the Federal Government • Income Tax: tax on individual Americans’ income • ½ of the federal budget comes from income tax • Some people get a refund because more money was withheld during the year than the taxpayer owed in taxes • Some people must pay additional taxes because the amount of money withheld was less than what was owed • Corporations pay 10% of the revenue (money earned) towards the income tax

  6. Taxes of the Federal Government 2. Payroll Tax: • Taxes are deducted from a workers paycheck to fund Social Security and Medicare • Social Security provides money for when we are disabled or retired • Medicare is healthcare for when we are old

  7. Taxes of the Federal Government 3. Other Taxes: • We pay federal taxes on: • Gas • Tobacco • Alcohol • Legal Betting • Telephone Services • When I die, an estate tax must be paid on all of my millions of dollars that my children inherit! • Other examples of places the federal government gets their money • Entry fees for national parks • Fees paid by oil companies • gifts

  8. Taxes of the State Government • Most of the money to run the state government comes from the federal government • The second larges source of money for the state government is state sales tax. • Ours is 5% • State governments do not like internet shopping because there is no state sales tax! • 3rd largest source of money for state: • Contributions to retirement plans • Last major place is from state income tax

  9. Taxes of the Local Government • Get a lot of their money from other levels of government • 2nd largest source: • Property taxes • Real Property: land, houses, buildings • Personal Property: Objects • Other sources of income for local government: • Water/utility systems • Sales tax • Local income tax • Meals/hotel tax

  10. What are taxes used to pay for? • schools, libraries, police fire departments courts, military, roads and bridges, space program research and help for people who are in need.

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