Stock Market Project Please read hand out and see example

Quiz Explain Cost Push inflation Define Cyclical unemployment Define Structural unemployment What are the three phases of the business

cycle? What are the three tools of the Federal

Reserve What is the goal of the federal reserve?

Review How do we measure our country’s economic growth?

GDP (Gross Domestic Product)

What kinds of goods are calculated in GDP? Durable and nondurable, finished goods, made within US borders

What are the three economic indicators used to gauge health of economy? Inflation, Unemployment, GDP

Why is real GDP more reliable than nominal GDP? Real GDP using constant prices and eliminates calculation of inflation

If the winter is extra long and harsh this year, what happens to the demand for sidewalk salt? What determinant is that? Increases. Right shift. Expectations.

Agenda

Extended Bellringer Announcements:

Final exam Personal Budget Project

Notes: Tax structures

Taxes

Brainstorm What types of things are provided to us through the use of tax money?

Military protection

Schools

Roads

Entitlement spending

Social security

Parks and recreation

Administration

Why taxes? The ability to tax is given to the government through the US Constitution

The Articles of Confederation failed miserably in large part to the inability to tax

As Citizens of the US, we authorize the government to levy taxes against us for our protection and welfare. Our representatives are supposed to keep it reasonable

Limited because of our history (revolution). Taxes must be for common defense and general welfare. Must be the same for every state.

Three types of taxes Tax: Required payment to a local, state, or national

government

Income tax: tax paid out of income (pay check)

Corporate tax: tax paid by business owners out of profit

Social security tax: half paid by individual from income, other half paid by employer

“Other” taxes Sales tax: Tax paid on purchased goods and services

Excise tax: Tax paid on certain items such as alcohol and tobacco to discourage purchase

Property tax: Tax paid on value of property owned

Federal Insurance Contributions Act (FICA): taken from paychecks to fund social security and medicare

Taxable Income Gross income made from employer – deductions = taxable income

Deductions: all types! Established by government to ease burdens Childcare costs

Head of household

Mortgage interest

Student loan interest

Capital losses

Donations to charity

Tax Structures Proportional taxes: Percentage of income paid in

taxes is the SAME for all income levels (6% if you make $500k or $50k)

Progressive taxes: Percentage paid INCREASES as your income INCREASES (6% for $500k, 4% for $60k)

Regressive taxes: Income paid for taxes DECREASES as your income INCREASES (3% for $500k, 6% for $60k) Rationale: those with less income will use more government services

so should pay more. Less taxes take from rich means more they will be able to spend to stimulate economy.

Characteristics of a good tax Simplicity

All citizens able to understand

Efficiency Able to collect and monitor without spending too much time and money

Fairness No one bears too much or too little of tax burden

Filing Taxes Taxes are taken out of pay based on your income level and basic deduction

level (W-4)

In January, you receive a W-2 form from every employer you had that states how much you made and how much money was paid in taxes for Federal, State, Local, and FICA taxes

You (or your tax guy) calculates the taxes you are responsible for and adjusts for any deductions. This makes sure you paid the correct amount. If you overpaid, you get a refund. If you underpaid, you pay the difference.

Federal Budget

Exit TicketProgressive Tax

StructureProportional Tax

StructureRegressive Tax

structure

Question: Which tax structure is the most fair in your mind? Why?