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Understanding Taxes: Types, Impacts, and Perspectives on Federal Taxation

Benjamin Franklin famously noted the inevitability of death and taxes, highlighting the certainty and persistence of taxation in society. In this context, we explore various types of taxes: income tax, payroll tax, estate and gift tax, excise tax, and tariffs. Each tax has potential pros and cons, influencing individuals and the economy differently. We also discuss progressive versus regressive tax systems, examining how they affect taxpayers across income levels. This comprehensive overview aims to provide insights into federal and state taxes, including specific rates applicable in New York.

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Understanding Taxes: Types, Impacts, and Perspectives on Federal Taxation

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  1. Do Now  “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” - Benjamin Franklin What point is Benjamin Franklin making? Why is he making this claim?

  2. Types of Taxes Income tax: government taxes a portion of your earnings (not just salary, i.e. capital gains, etc.) Payroll tax: tax to pay for social security and Medicare (calculated from your salary) Excise tax: tax on luxury items Estate/gift tax: over $2MM and over $13K/year Tariff: Taxes on imports (foreign goods).

  3. In groups of 4… List the pros and cons of each federal tax: • Income Tax • Payroll Tax • Estate Tax/Gift Tax • Excise Tax • Tariffs

  4. Progressive Tax A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals. (Example: US Income tax) Regressive Tax A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder. (source: Investopedia.com)

  5. Federal Taxes

  6. New York State Taxes

  7. New York City Tax Rate

  8. Social Security Tax Social Security 6.2% on all income up to $113,700 Medicare Tax rate is 1.45% (2.9% if self-employed

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