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Taxation Policy and Its Impact on You

Taxation Policy and Its Impact on You. Understand the difference between a progressive and proportional tax system Analyze the effect taxation plays on the purchasing power of the dollar

beverlyclifton
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Taxation Policy and Its Impact on You

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  1. Taxation Policy and Its Impact on You Understand the difference between a progressive and proportional tax system Analyze the effect taxation plays on the purchasing power of the dollar Based on an in-class simulation, draw informed conclusions on the fairest tax system and the potential effects of an increase or decrease in taxation $500,000/ year you pay$222,344.50 If your income is $100,000.00/ year you pay…$19,502.50 If your income is $45,000/ year you pay…$6,082.50

  2. Tax Simulation • 2 sides, each with a different system of collection • 3 levels of income: low, middle, high • Play 3 rounds (3 years) to see the effects of each system • “Collector” role for each side Sit back and see your $ disappear!!!

  3. Forms of Tax • Progressive tax (group #1) • The more income, the higher the tax • Used on income taxes at the federal, state, and local level • Proportional or Flat Tax (group #2) • Same percentage of taxation no matter the income • Sales tax, Medicare tax @ 1.45%, Capital Gains tax @ %15

  4. Remember…Inflation/Deflation • Purchasing power of the dollar • Inflation decreases the purchasing power • Higher prices…people can buy less with same amount of $ • Deflation increases the purchasing power • Lower prices…people can buy more with same amount of $

  5. Reflection… • Strength/weakness? • Larger impact? • Why do we study? • Controversial?

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