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Transcript of TAXES
as income increases, amount taken in taxes increases
ex: the 7% tax on the purchase of a new car impacts Joey a lot more than it impacts Susie!
How the government
types of taxes
a tax rate that doesn't change with respect to change in income
ex: someone who makes $10,000 pays 5% in taxes
someone who makes $50,000 pays 6% in taxes
makes $10,000 a year. tax will be $700
makes $1,000,000 a year. $700 tax doesn't matter as much!
How certain taxes affect individuals and businesses
a tax rate that decreases as income increases
ex: 12.4% of paycheck taken for Social Security
The sales tax on a $20.00 is 7%,
or $1.40. This tax is a bigger burden for Josh, who has a $15,000 income than for Aaron who has a $150,000 income.
What type of tax is this?
Which statement about taxes is MOST accurate?
A. A flat income tax is regressive.
B. Progressive income taxes are designed to benefit the wealthy.
C. Federal income taxes are an example of a proportional tax
D. A sales tax is regressive.
Your paycheck says that you paid a 7% tax on your income. This income tax is an example of a
ex: federal income tax
ex: sales tax
the wealthy pay a higher % of their earnings
a "flat" tax
how does an increase in sales tax affect us?
what type of tax is sales tax?
high sales tax affects those with lower incomes more than those with higher incomes.
this is why food at grocery store usually doesn't have a sales tax (or has a low %). BUT... restaurants do charge sales tax b/c dining out is a luxury.
how property tax
property tax: tax on real estate
when property tax increases, lower income people may not be able to pay it... and can lose their homes.
gentrification: when high income property owners replace low income owners who can't afford the property tax increase.