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# How can the U.S. significantly decrease the deficit PowerPoint PPT Presentation

How can the U.S. significantly decrease the deficit. 1) 2) 3) 4). Taxes. Spending. Tax Rate Introduction. U.S. Federal Income Tax System. 3 Types of Taxes. Progressive- Tax rate increase as income increases Example: Income Taxes Regressive-

How can the U.S. significantly decrease the deficit

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#### Presentation Transcript

How can the U.S. significantly decrease the deficit

1)

2)

3)

4)

Taxes

Spending

## Tax Rate Introduction

U.S. Federal Income Tax System

### 3 Types of Taxes

• Progressive-

• Tax rate increase as income increases

• Example: Income Taxes

• Regressive-

• Consumes larger % of lower income worker’s salary

• Example: Gasoline Tax, Bridge Tax

• Flat

• Same % for everyone

• Example: Sales Tax, Some State income taxes

Purpose/Goals

of an INCOME TAX

### Tax Worksheet

• History of Income Taxes

• Taxes people pay

EVERY taxpayer pays

10% on first \$8,350 of income

### Federal Income Tax

• Progressive Income Tax

As income% Tax Bracket

Example: If you Earn \$100,00 (single)

(\$ 8,350   -   0 )  x .10 :      \$   835

(33,950   -   8,351)  x .15 : 3,840

(82,250   -   33,951)  x .25 : 12,075

(100,000   -   82,251 )  x .28 : 4,970

Total:   \$ 21,720 or 21.7%

2 Wage Earners

Mary earns \$60,000

John earns \$360,000

\$5,855

\$2,520

\$870

\$1,617

\$49,137

\$4,094

\$10,863

18.0%

Federal Taxes

Social Security

Medicare

California Tax

Take Home Pay

Pay Per Month

Total Taxes Paid

Overall Tax % Rate

\$91,025

\$4,485

\$5,220

\$32,123

\$226,965

\$18,913

\$133,035

37.0%

http://www.paycheckcity.com/calculator/netpay/us/california/calculator.html

### Numbers to Know for Exam

• Top 1% of Taxpayers(\$343,000 + Up)

• Pay 38% of all taxes

• Earn 20% of all income (1.4 million households)

• Top 10% of Taxpayers(\$115,000 + Up)

• Pay 70% of all income taxes

• Earn 46% of income

• Bottom 50% of Taxpayers(\$33,000 + Below)

• Pay 3% of Income Taxes

• Earn 13% of Income

Top 1% pay more taxes but

The income Gap has widened last

30-Years

EQUAL % tax cuts

What best stimulates economic growth?

### Equal % Tax Cuts

• Example: 10% tax cut for ALL taxpayers

• Who gets more nominal dollars (money)

• Earn \$120,000 Taxes \$36,000Refund \$3,600

• Earn \$24,000 Taxes \$3,000Refund \$300

### Fiscal Cliff December 2012

Bush Tax cuts are now permanent

New top bracket