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Taxation

Taxation. Taxes. “In this world, nothing is certain but death and taxes.” – Ben Franklin “ Taxation is the price we pay for civilization.” – SC Justice Oliver Wendell Holmes “No taxation without representation.” – framers of the US Constitution.

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Taxation

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  1. Taxation

  2. Taxes “In this world, nothing is certain but death and taxes.” – Ben Franklin “Taxation is the price we pay for civilization.” – SC Justice Oliver Wendell Holmes “No taxation without representation.” – framers of the US Constitution

  3. Adam Smith’s Principles on Taxation • Wealth of Nations , 1776(father of modern capitalism) • Equity – believed the rich should pay a higher tax than the poor • Simplicity – tax laws should be straight forward • Efficiency – maximum gain for gov’t while inflicting minimal loss on taxpayers

  4. Who should pay and why? Ability-to-pay principle– people should be taxed according to their income (rich taxed more and poor taxed less)….Fed/state income taxes are based on this

  5. Warm up 1/16/15 What are the 3 principles of taxation that Adam Smith believed are essential? What are the 6 purposes of government?

  6. Who should pay and why? Benefits received principle – if you benefit from a program, you should pay for it (e.g. if you drive you should pay for the upkeep of our highway system)

  7. Tax Structure • Proportional Tax– takes the same share of income at all income levels (e.g. Property/School tax)

  8. Progressive Tax– takes a larger share of income as income increases (e.g. Income Tax)

  9. 3. Regressive Tax– takes a smaller share of income as income increases (e.g. Sales Tax- poor pay more of their income in sales tax than the rich)

  10. Tax Base and Tax Rate • Tax Base: the thing that is taxed • Ex. Property, good, income, revenues • Tax Rate: the percentage of income- of value of good/service- that is taxed • Ex. Income tax rate=20% you pay 20% of income in taxes. • Ex. If Sales tax is 6%, you pay 6% of total purchase in sales tax.

  11. Excise/Luxury Taxes (Sin taxes) Toll Tax Social Security Taxes Estate/Inheritance Taxes Property Taxes Sales Taxes Income Taxes

  12. Excise/Luxury Taxes (Sin taxes) User fees/tolls Payroll Taxes Estate/Inheritance Taxes Property Taxes Sales Taxes Income Taxes

  13. Copy and Complete

  14. Copy and Complete

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