Download Chapter 9

Chapter 9
Sources of Government Revenue
For Certain…
• Only two things are certain…
• _________________________________________
• They have finally simplified the tax forms.
1040 EZEST
Line 1 How much do you make
Line 2 Attach check for amount
shown in Line 1
$_______
$_______
An Effective Tax System
•
•
•
•
_________________________________
Easy to ___________________________
Easy to _____________ and hard to ________________
Imposed __________________ and _____________
Principles of Taxation
• _______________ Principle of Taxation
– Those who received benefit from government services should be the
ones ____________________________.
– People should pay taxes __________________ to the amount of
services they receive.
– Example: ___________________ for those who use ________
– Limitations:
• Many government services used by those who can ____________
to pay.
Example: __________________
• Benefits are ____________________________-.
Example: Hotel’s benefit from a _______________.
__________ taxes.. Who really benefits from education?
Principles of Taxation (cont.)
• ________________________ Principle of Taxation
– Taxes according to ____________ regardless of benefit
– Based upon two things:
• __________________ to measure benefits of government
spending.
Example: benefit of a _______________
– People with higher incomes _________________ by paying higher
taxes.
Types of Taxes
• Regressive Taxes
– Low incomes pay a higher percentage of their incomes in taxes.
Income
Amt. Of Tax
% of Tax Paid
$1000
$800
____%
$8000
$800
____%
$80,000
$800
____%
• Progressive Taxes
– High incomes pay a higher percentage of their incomes in taxes.
Income
Amt. Of Tax
% of Tax Paid
$1000
$10
____%
$8000
$800
____%
$80,000
$68,000
____%
• Proportional Taxes
– All incomes pay the same percentage of taxes.
Income
Amt. Of Tax
% of Tax Paid
$1000
$100
____%
$8000
$800
____%
$80,000
$8000
____%
Federal Taxes
• ____________ Taxes
– ___________________- tax based upon _____________________
– Amount owed based upon __________, __________status, and
_________________ claimed
– The large number of deductions make it possible for ________
people to ____________-- taxes
Federal Taxes (cont.)
• _______________________ (FICA) and __________________
___________________ to a point, then ______________________
Update 2003 Social Security Administration Website
– Probably won’t be around __________________, although you may
____________________ the system for years.
– For every dollar that you have withheld in Social Security and
Medicare, your _______________ must contribute a dollar.
– Much debate about reforming the system, allowing workers to put
money into _____________________________ instead of Social
Security.
–
• __________________ Income Taxes
–
–
–
–
–
___________________ to a point then ___________________
This is a tax on corporate _______________
Double taxation:
Net Income Before Tax
Federal Income Tax
Net Income After Tax  ____________to Stockholders
 ___________________
Shareholders are then taxed on dividends earned.
This double taxation can be rationalized by government because a
corporation and its stockholders are _________________________.
Recently, the _______________ on dividends earned has been
____________.
• Federal ____________ Taxes
–
–
Tax on the manufacture or sale of certain items such as ________,
___________, _________, ______________
A ______________ tax as _______ income people spend more of
their income on these items.
TAX FOUNDATION'S EXCISE TAX SECTION
• __________ Taxes
–
–
Tax on the wealth of a _____________ person
This tax is being ____________ and currently is not applicable on
estates under $1,000,000
Federal Estate and Gift Taxes
Federal Taxes (cont.)
• Gift Taxes
–
–
Created so people cannot avoid ______________
Gift tax is on any gift over $_____________ per year
• Customs duties / tariffs
–
–
Tax on _____________
A ____________ of federal income.
• Unemployment taxes
–
–
Paid by ______________ based upon employee earnings
Provides a fund to help __________________________
Overview of Federal Taxes
The Federal Budget: Fact File
State of Ohio Taxes
• State _____________ Tax
• State __________ Tax
–
–
–
Rates: Taxes–States–Sales Tax (6% in Ohio)
Tends to be ____________ unless staples such as food and drugs
are not taxed
Paid on cost of ____________ as well as goods
• Corporate Franchise Tax
–
Tax on corporate _______________-
• Estate Taxes
_______ % of estates over approx $________________
Estate Tax
–
State of Ohio Budget
http://www.unitedwaycanton.org/compass/downloads/education/ohiobud.pdf
Local Taxes
• City Income Taxes
–
Galion _________%
• Piggyback Sales Tax
Crawford County ____%
Ohio Sales Tax Tables
• ______________________ Taxes
–
–
Some district’s voters have passed an income tax that goes directly
to the _____________________
Argument that it is more fair than _________________ where
retired people __________________ additional taxes
• Property Taxes Tax Rates
– Real estate taxes based upon ________________ of the property X
_____________ (1 mill = _________ cent)
– Tax paid to the _____________________
– Majority goes to ___________with some going to ____________
government services
• Personal Property Tax
– On business machines, equipment, inventory
– 25% of all value over $10,000
Personal Property
Tax Issues
1. The _____________ of the tax
• Where the ________________________ of the tax rests
______________ Tax – taxpayer pays directly to the government
and _______________________ to another person or group
Examples: ___________ income tax and __________ taxes
_____________ Tax – a tax that _______________________ – or
__________ - to another person or group
Examples: __________ taxes, __________ taxes
See overhead – direct vs. indirect taxes
Tax Issues (cont.)
2. __________ tax vs. present system
–
–
–
–
______________________ - Forbes magazine is the chief
proponent
Flat tax is a purely _______________ tax
Problem with flat tax is since there are _____________________ to
_____________ taxes, people will:
• Make less _____________________________
• Avoid paying ________________________ when possible
• Not conserve ________________
Flat tax won’t happen because the _____________ (who _______
____________________ would be hurt the most by the elimination
of tax deductions.
3. Tax __________________
–No _________________ taxes for a period of time in exchange
for a new company _____________________________
–Some companies will pay the ___________ portion of the tax as a
public relations maneuver
4. ________________ tax
– A product is taxed ________________ between producer and
consumer
– An ____________ tax as the cost will be passed on to the
_________________________________.