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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-

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How can the U.S. significantly decrease the deficit

1)

2)

3)

4)

Taxes

Spending


Tax rate introduction

Tax Rate Introduction

U.S. Federal Income Tax System


3 types of taxes
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
Tax Worksheet

  • History of Income Taxes

  • Taxes people pay


Federal income tax

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
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
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




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