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What’s the connection between taxation and social programs?

What’s the connection between taxation and social programs?. To what extent should Canadians support social programs and taxation?. Introduction.

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What’s the connection between taxation and social programs?

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  1. What’s the connection between taxation and social programs? To what extent should Canadians support social programs and taxation?

  2. Introduction • In order to support social programs, both the Canadian and United States governments must have the funds. These funds are collected through taxes that are placed on economic activity. • This is called the tax base. The bulk of federal taxes are collected in the form of income tax, corporate tax, and sales tax.

  3. Definitions • Tax Base: economic activity that the government taxes in order to pay for services and programs • Income Tax: tax collected by government from all employed individuals; based on a percentage of personal income • Corporate Tax: tax collected by government from businesses; based on a percentage of a business’ earnings from the sale of products and services

  4. Sales Tax: tax paid when a product or a good is received; based on a percentage defined by federal and most provincial governments • For example, the national GST is 5% on most items. • Alberta is the only province that does not have a provincial sales tax (PST) to pay in addition to the national GST.

  5. Taxes • Let’s examine Where Your Tax Dollars Go to find out where tax dollars are spent and how this money is raised. • As you watch, determine how many cents of every dollar are spent on health care and other social programs such as Old Age Security for senior citizens and Employment Insurance (EI) benefits.

  6. Assignment • Let’s take a closer look at our tax dollars and the programs they support. • Complete Lesson 2: Taxes and Social Programs.

  7. You have learned that the government uses a tax base to pay for the many social programs and services that are provided to citizens. • The majority of federal taxes are collected in the form of income tax, corporate tax, and sales tax. There are many instances where goods and services are sold without the paying of these taxes. This type of purchasing and selling without paying taxes is called tax evasion, which in turn creates an underground economy or black market.

  8. tax evasion: not paying taxes when expected to do so, or not declaring all income earned • underground economy: the buying and selling of goods and services illegally • black market: another term for underground economy • Government of Canada and their perspective.

  9. Assignment • Read page 284 of your textbook for an example of the underground economy. • Complete the first question at the bottom of page 284 by brainstorming a list of consumer behaviours that might deny the government tax revenue. • Read and examine the advice column on page 285. What are the positives and the negatives of each response to the letter received by Mr. Equity?

  10. In summary: • What is the underground economy: • Businesses that do not properly collect taxes. • Businesses that do not send collected taxes to the government. • Individuals who do not pay sales tax on purchases. • Individuals or businesses that misrepresent income to tax authorities.

  11. Why bother? • Undermines the government's efforts to protect society when banned goods and services are sold in the underground. • Puts legitimate business at a disadvantage where legal goods and services are sold in the underground economy to evade taxes. • Governments are forced to levy higher taxes to compensate for the lost revenue needed to pay for infrastructure and to deliver benefits to all citizens (e.g. Health care, education, employment insurance).

  12. Both the Canadian and the United States governments support social programs to a certain extent. However, due to the differing values of each of these nations and their governments, their social programs are not the same.

  13. Canada, taxes, and social programs • Canada generally values the achieving of public good through the support of all citizens through taxes. • Higher taxes generally describe a philosophy in which it is believed that all people should contribute to the welfare of the collective group in society. • Our government collects money through taxation, which then allows the government to spend more money on programs for our citizens.

  14. U.S., taxes, and social programs • The United States believes that the public good is achieved through the strength of its individuals. • Their government generally advocates lower taxes. This demonstrates a philosophy that people can and should take care of themselves. • Taxing citizens less will leave them with more money that they can then use to take care of themselves.

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