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Tax bases & structures

Tax bases & structures. Most Common Tax Bases. Individual income tax Corporate income tax Sales tax Property tax. Individual Income Tax. Tax based on an individual’s income from all sources. Corporate Income Tax. Tax based on a corporation’s profits. Sales Tax.

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Tax bases & structures

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  1. Tax bases & structures

  2. Most Common Tax Bases • Individual income tax • Corporate income tax • Sales tax • Property tax

  3. Individual Income Tax • Tax based on an individual’s income from all sources

  4. Corporate Income Tax • Tax based on a corporation’s profits

  5. Sales Tax • Tax based on the value of goods or services at the time of sale. http://www.tax.ny.gov/pdf/publications/sales/pub718.pdf http://www.earthodyssey.com/sales_tax.html

  6. Property Tax • Tax based on the value of an individual’s or business’s assets, generally real estate.

  7. Proportional Tax • Takes the same % of income from all taxpayers regardless of how much they make • “FLAT TAX”

  8. Progressive Tax • Places a higher % rate of taxation on higher-income earners • The Federal Income tax

  9. Regressive Tax • Takes a larger % of income from people with lower incomes • SALES • PROPERTY

  10. Why tax incentives? • The gov’t may encourage behavior that it believes is good for the economy and for society http://thehotellafayette.com/

  11. What is a sin tax? • Taxes imposed on products or activities considered to be unhealthful or damaging to society

  12. Withholding • Money taken from a worker’s pay before the worker receives it • Also called the payroll tax

  13. Ability-to-pay Principle • People with higher incomes not only pay more in total taxes but also pay a higher percentage of their income in taxes

  14. National Debt

  15. What is national debt? • The total amount of money that the government owes • National Debt = Sum of annual budge deficits – any budget surpluses or other payments against the debt

  16. $16,439,519,291,252.22 The estimated population of the United States is 314,176,428, so each citizen’s share of this debt is $52,325.75! The National Debt has continued to increase an average of $3.86 billion per day since Sept. 28, 2007! http://www.brillig.com/debt_clock/faq.html

  17. What is deficit spending? • A government spends more than it collects in revenue

  18. How is money raised for deficit spending? • Treasury Bills – mature in less than 1 year • Treasury Notes – mature in 2-10 years • Treasury Bonds – mature in 30 years • Trust Funds – S.S., medicare, medicaid • Interest paid on all w/ higher interest rates on those with longer maturity dates

  19. In 1981 national debt was _______% of GDP (______% privately owned) In 2006 national debt was _______% of GDP (less than _______% privately owned) 33 80 68 60

  20. Effects of Debt POSITIVE • When government spends to stimulate the economy NEGATIVE • Gov’t competes w/ the private sector for investments • With more debt, the gov’t is just repaying interest

  21. Top 10 U.S. Creditors • China  $906.8 billion • Japan  $877.4 billion • England  $477.6 billion • Oil exporters (OPEC)  $213.9 billion • Brazil  $177.6 billion • Hong Kong  $139.2 billion • Caribbean banking centers  $133.7 billion • Russia  $131.6 billion • Taiwan  $131.2 billion • Canada  $125.2 billion

  22. The following are the top ten creditors to the USA as of March, 2009: (Amt. in Billions) • China 767.90 2 • Japan 686.70 3 • Caribbean Banking Centers 213.60 4 • Oil Exporters 192.00 5 • Russia 138.40 6 • United Kingdom 128.20 7 • Brazil 126.60 8 • Luxembourg 106.10 • Hong Kong 78.90 • Taiwan 74.80

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