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Ch. 9 Taxes

Ch. 9 Taxes. Assignment. Go to both Mitt Romney and President Obama’s campaign websites. http ://www.mittromney.com/issues/tax http://www.barackobama.com/taxes?source=primary-nav Read what each candidate plans to do regarding taxes.

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Ch. 9 Taxes

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  1. Ch. 9 Taxes

  2. Assignment • Go to both Mitt Romney and President Obama’s campaign websites. • http://www.mittromney.com/issues/tax • http://www.barackobama.com/taxes?source=primary-nav • Read what each candidate plans to do regarding taxes. • Make a T chart. With Romney on one side and Obama on the other. Take notes on their plan for taxes. • Create a Campaign Poster for ONE candidate aimed at undecided voters. The focus of your poster should be TAXES. • Turn in both your T chart and your poster. • Due by Nov. 2. No late work will be accepted after Nov. 6 (Election Day).

  3. Taxes • Read 223-224 together. • Sin Tax - a relatively high tax designed to raise revenue and reduce consumption of a socially undesirable product such as liquor or tobacco. • This tax is used to change behavior. • Sometimes they don’t work – because tobacco is inelastic – please still buy cigarettes. But it is a way to raise a lot of revenue for the government.

  4. Video on Sin Tax • Sin Tax in the News – Video • Answer these questions as you watch. • Name three states that tax tobacco and alcohol. • How much are they proposing to tax each alcoholic drink? • What do you think?

  5. Make a quick T chart.

  6. What about taxing other sins? • It is proven that sugar is harmful to your health. • Should sugary foods be taxed to deter Americans from eating sugary foods , which could down the line cause health problems and burden the Medicare system? • Fox News on Sugar Tax

  7. Criteria for Effective Taxes • Are they fair? • Should everyone pay the same amount? • Should wealthier people pay more than those with lower incomes. • Tax Loopholes – exceptions or oversights in the tax law that allow some people and businesses to avoid paying taxes.

  8. Video on Loopholes • Larry the Loophole • List some of the criticisms of big business that Larry the Loophole talks about. • The President on Loopholes • What kind of loophole is the President talking about?

  9. Corporate Tax Rates • The Daily Show

  10. Criteria for Effective Taxes • Simplicity • The Individual income tax – tax on people’s earnings – is a prime example of a complex tax • Internal Revenue Service (IRS) collects our taxes but produces a very complicated book and instructions for our taxes • Sales Tax – is an example of a simple tax. Paid at the time of purchase, collected at the time the purchase is made.

  11. Criteria for Effective Taxes • Efficiency • Does the tax raise enough revenue to be worthwhile? • Luxury tax on small private aircraft – • Sounds good…but the tax caused less people to buy the airplanes so layoffs happened • But it only collected 53,000 in one year because so few planes were sold. • The 53,000 was less than the unemployment benefits paid out to the people who lost their jobs. • Congress repealed the tax on small aircraft because it didn’t’ make sense

  12. Benefit Principle of Taxation • Those who benefit from govt. goods and services should pay in proportion to the amount of benefits they receive. • For example, Gov’tpays for highways. Those who drive on the highways more, pay the toll fees. • For example, those who drive more pay more gas tax – this gas tax goes to keeping our roads and highways in shape.

  13. Ability-to-pay principle of taxation. • The belief that people should be taxed according to their ability to pay regardless of the benefits they receive. • Example: • A family that makes $20,000 pays a tax rate of 14% - 2,800. Which is a lot of money to them. A family that makes $100,000 can afford to pay a higher tax rate than 14% and suffer much less discomfort.

  14. Types of Taxes • Proportional Tax – imposes the same percentage of taxation on everyone regardless of income • If income tax rate is 20%, an individual with $10,000 income pays $2,000. A person with $100,000 pays $20,000. • Do you think this is fair?

  15. Types of Taxes • Average Tax Rate • Total taxable income divided by the total income – is constant, regardless of income. If a person’s total income goes up, the percentage of total income paid in taxes does not change.

  16. Types of Taxes • A progressive tax – a tax that imposes a higher percentage rate of taxation on persons with higher incomes. • These use a marginal tax rate, a tax rate that applies to the next dollar of taxable income, that increases as the amount of taxable income increases.

  17. Types of Taxes • Regressive Tax • A tax that imposes a higher percentage rate of taxation on low incomes than on high incomes. • For example, a person with an annual income of $10,000 may spend $5000 on food and clothing, while another person with an annual income of $100,000 may spend $20,000 on food and clothing. If the state sales tax is 4% the person with the lower income is paying a higher percentage of total income in taxes.

  18. Poor vs. Rich • Pay attention to his sarcasm. What is his point? Be ready to discuss.

  19. Daily Show • Bringing it all together. • What is the class warfare the President mentions? • What does he want to do to the wealthy? • What does he say we need to do to other govt programs?

  20. Summative • Write a 1 paragraph summary of what you learned today.

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