Taxes

1. Taxes Do Now: If Americans stopped paying taxes, what do you think would happen?

2. Taxes • Three different types of major federal taxes: • Personal Income Tax • Corporate Income Tax • Social Security Tax

3. Types of Federal Taxes – 2010 Revenue • Personal Income Tax – 984 Billion • Corporate Income Tax – 199 Billion • Social Security Tax – 906 Billion • Other – 175 Billion

4. Graph – Tax Revenues by % (2008)

5. State/Local Taxes • Sales Taxes – Cars, computers, clothes, books. • State governments typically raise revenues through sales taxes. Taxes are placed on goods at the point of service/sale. • State Income Tax • Property Taxes – Paid to your local city or town.

6. Excise Taxes • Excise Taxes – Taxes placed on goods such as tobacco and gasoline. Taxes are already built into the price. Can be state or federal.

7. Forms of Payment • Annual Tax Returns: (Federal Income, Corporate and Social Security Taxes) (State Income Tax) • Upon Purchase – (Sales taxes)

8. Progressive Income Tax • People pay at a higher rate as their income rises. • It is usually capped at a certain tax rate. In America, for instance, no one pays higher than 35 percent of their income.

9. 2011 U.S. Tax Brackets • Single Married/Filing Jointly Head of Household • 10% Bracket $0 – $8,500 $0 – $17,000 $0 – $12,150 • 15% Bracket $8,500 – $34,500 $17,000 – $69,000 $12,150 – $46,250 • 25% Bracket $34,500 – $83,600 $69,000 – $139,350 $46,250 – $119,400 • 28% Bracket $83,600 – $174,400 $139,350 – $212,300 $119,400 – $193,350 • 33% Bracket $174,400 – $379,150 $212,300 – $379,150 $193,350 – $379,150 • 35% Bracket $379,150+ $379,150+ $379,150+

10. Economics – 11/17/11 • Aim – Is the current tax system in America a fair one? • Do Now – Based on your overall knowledge of economics, does America have a fair tax system?

11. Proportional Tax Rate • An income tax that everyone pays at the same rate, whatever the income. • Also called a flat tax • Russia – 13%, Serbia – 14%, Romania – 16%

12. Taxes – Fair Share? • Top 1 % - Earning above 410,000 – Pay 40 % • Top 10 % - Earning above 113,000 – Pay 60 % • Top 25 % - Earning above 66,000 – Pay 86 % • Top 50 % - Earning above 32,000 – Pay 97 % • Bottom 50 % - Earning below 32,000 – Pay 3 % • Do the wealthy appear to be paying their fair share? Why or why not?

13. Tax Refund Loans • These types of loans are a bad idea unless you need the money for an emergency • Fees associated with the lender are often very high. • Sometimes called Refund Anticipation Loans • APR can get as high as 250 percent

14. Fair Debt Collection Practices Act • Hours for phone contact: only allowed between 8:00 a.m. to 9:00 p.m. local time • Failure to cease communication upon request • Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously: with intent to annoy, abuse, or harass any person at the called number. • Communicating with consumers at their place of employment after being advised that this is unacceptable or prohibited by the employers • Misrepresenting the debt or using deception to collect the debt, including a debt collector's misrepresentation that he or she is an attorney or law enforcement officer

15. Closing Credit Cards/Debit Cards • Call and notify the company you are closing. Or notify them in writing that you are closing the card • Cut up the credit card • Dispose of the card parts in different garbage bags

16. FHA Loans • The Federal Housing Administration • Insures lenders that make mortgage loans to low income buyers/or people with low credit scores • Home buyers have to meet income guidelines to qualify • Goal is to encourage home ownership while also helping to protect lenders