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How can the U.S. significantly decrease the deficit

How can the U.S. significantly decrease the deficit. 1) 2) 3) 4). Taxes. Spending. Tax Rate Introduction. U.S. Federal Income Tax System. 3 Types of Taxes. Progressive- Tax rate increase as income increases Example: Income Taxes Regressive-

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How can the U.S. significantly decrease the deficit

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  1. How can the U.S. significantly decrease the deficit 1) 2) 3) 4) Taxes Spending

  2. Tax Rate Introduction U.S. Federal Income Tax System

  3. 3 Types of Taxes • Progressive- • Tax rate increase as income increases • Example: Income Taxes • Regressive- • Consumes larger % of lower income worker’s salary • Example: Gasoline Tax, Bridge Tax • Flat • Same % for everyone • Example: Sales Tax, Some State income taxes

  4. Purpose/Goals of an INCOME TAX

  5. Tax Worksheet • History of Income Taxes • Taxes people pay

  6. EVERY taxpayer pays 10% on first $8,350 of income Federal Income Tax • Progressive Income Tax As income% Tax Bracket Example: If you Earn $100,00 (single) ($ 8,350   -   0 )  x .10 :      $   835 (33,950   -   8,351)  x .15 : 3,840 (82,250   -   33,951)  x .25 : 12,075 (100,000   -   82,251 )  x .28 : 4,970 Total:   $ 21,720 or 21.7%

  7. 2 Wage Earners Mary earns $60,000 John earns $360,000 $5,855 $2,520 $870 $1,617 $49,137 $4,094 $10,863 18.0% Federal Taxes Social Security Medicare California Tax Take Home Pay Pay Per Month Total Taxes Paid Overall Tax % Rate $91,025 $4,485 $5,220 $32,123 $226,965 $18,913 $133,035 37.0% http://www.paycheckcity.com/calculator/netpay/us/california/calculator.html

  8. Numbers to Know for Exam • Top 1% of Taxpayers($343,000 + Up) • Pay 38% of all taxes • Earn 20% of all income (1.4 million households) • Top 10% of Taxpayers($115,000 + Up) • Pay 70% of all income taxes • Earn 46% of income • Bottom 50% of Taxpayers($33,000 + Below) • Pay 3% of Income Taxes • Earn 13% of Income

  9. Top 1% pay more taxes but The income Gap has widened last 30-Years

  10. EQUAL % tax cuts What best stimulates economic growth?

  11. Equal % Tax Cuts • Example: 10% tax cut for ALL taxpayers • Who gets more nominal dollars (money) • Earn $120,000 Taxes $36,000Refund $3,600 • Earn $24,000 Taxes $3,000Refund $300

  12. Fiscal Cliff December 2012

  13. Bush Tax cuts are now permanent New top bracket

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