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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-

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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

• 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

of an INCOME TAX

• History of Income Taxes

• Taxes people pay

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%

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

• 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

The income Gap has widened last

30-Years

EQUAL % tax cuts

What best stimulates economic growth?

• 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

New top bracket