tax types, reading and notes

Bellringer on your ½ sheet

“In this world nothing can be said to be certain, except death and taxes.”

Benjamin Franklin

US Federal Tax Rates: (only 3 % of Americans make over $250,000)

Add 10 -15 % more depending on which state you work in

3. On your ½ sheet how much in tax would you would pay?

Gross income: How much you earn Net income: how much you keep

Net income = gross income - gross income*tax rate

For example: Mr. Klein made $37,500 last year.

Net income = $37,500 - $37,500(.25) Net income = $37,500 - $9,375 = $28,125

4. How much is your “net income”?

    United Kingdom

21-28%0-40 %

17.5%

Ireland 12.5 %20-41%

21 %

Mexico 29%3-29 %

15 %

Sweden 28 %0-59 %

25 %

Slovakia 19 %19 % 19 %

Hong Kong 15 %0-15 %

0 %

United Arab Emirates

0 %0 % 0 %

Country CorporateTax rate

Income Tax

SalesTax

3 countries

1. What tax is being discussed?2. What social problem were they trying to solve?3. How might this tax create more problems?4. Share with group5. What are the four types of taxes mentioned in

the articles?

AS A GROUP:5. Suggest two changes each country could

make rather than the taxes they imposed.

According to Adam Smith: Simple to understand Avoid negative incentives Avoid loopholes

IRS manual – 70,000 pages (4 X size of the Bible)

Tax incentives Really, ways to not pay tax “write offs”

Thousands of examples: http://blog.turbotax.intuit.com/deductions

-and-credits/uncommon-silly-and-just-plain-weird-tax-deductions/01042010-1194

IRS – tax collection agency in USA Taxes are deducted throughout year Every citizen must file every year by: If you paid more during the year then you

need to: you get a refund If you paid less during the year then you

need to: pay the difference

For example: Mr. Klein made $37,500 last year.

Net income = $37,500 - $37,500(.25)

Net income = $37,500 - $9,375 = $28,125

If Mr. Klein paid $10,375 in 2010, what happens after he files?

Why is a BIG refund not such a great idea?

Tax on a household income% increases b/c income

“tax the rich more!”The more you make, the

higher your tax %For example: Tax $12/hour

labor or accountant $55,000/year

Why common in USA & EUIncentive?

Progressive Income Tax

IncomeTax Rate

$0-$15,000 0%

$15,001-$20,000 10%

$20,000-$30,000 15%

$30,000-$50,000 25%

$50,000-$100,000 33%

$100,001 + 38%

Tax on a household income

% of stays the same

“flat tax” For example: 5%

tax, $25,000/year or $100,000/year

Why rare in USA? Incentive?

Other taxes

Tax on something you own

Usually expensive like your house or boat

For example: $100,000 home 5% property tax rate

100,000 X .05 = $5,000 property tax

Incentive?8.01 % ave Pima Co rate

Smaller % taken the higher your income

Sales tax For example: 5% tax,

$25,000/year w/$10,000 consumption pays: 10,000 X .05 = $500, or 2% of total income

$50,000/year w/$15,000 consumption pays: 15,000 X .05 = $750, or 1.5% of total income

Incentive? Why don’t poor people get

upset?

OPTIC

Tax on real estate, stock sales or dividends, or collectables.

Why not only for the rich?

Tax on gifts or rewards

Games shows, gambling, lottery

Rate depends on gift 35-60 % Is this a bad

incentive?

Tax on inheritance Sometimes called

“death tax” In US today,

$2,000,000 and up 55% rate

Is this a bad incentive?

US estate taxes over the years

GW Bush worked to repeal in 2001

Came back in 2011 when law expires

Barack Obama supports estate tax

1040 Form for IRS 1040EZ W2 from employer (s) – shows wages 1099 (other forms for interest, stock income,

etc)

Plus you must file in every state except: TX, NV, NH, FL, WA.

Progressive income tax Regressive income tax Proportional income tax IRS deadlines and forms Sales tax Estate tax Property tax Gift tax