Taxation Review
1.
Why do various levels of government collect taxes?
2.
Identify each of the three types of taxation, briefly define each type, and give an example of each tax:
Type of tax
Definition
Example of this type of tax
3.
Explain how the U.S. progressive income tax system works.
4.
Both individuals and corporations must pay tax on their incomes. (Circle One)
5.
Do you believe that the progressive tax system is fair? Why or why not?
6.
For each of the following taxes, identify the type of tax and the level of government that collects the tax:
Specific Tax
Property tax
Medicare tax
Sales tax
Personal income tax
Type of tax (progressive, regressive, or proportional)
TRUE or FALSE:
Level of government that collects the tax
(local, state, national or some combination)
In addition to paying federal income taxes people must also pay:



State Income Taxes
(varies by state, about 9% of income in California)
Social Security Taxes (FICA) (12.4% on first 105,000 of income, employer pays half & you pay half)
Medicare Taxes
(about 1.5% income with no limit)
Finally, on most purchases consumers pay an additional sales tax of 8.75% in California.
What do people actually pay in taxes? Here are two examples below. However, you can calculate taxes for different
scenarios using the paycheck tax calculator on my website….
1) John is single and earns $360,000 per year
2) Mary is single and earns $60,000 per year
JOHN
Salary per year
__________
MARY
Salary per year
__________
Federal Income Taxes ___________
Federal Income Taxes ___________
Social Security Taxes
____________
Social Security Taxes
____________
Medicare Taxes
___________
Medicare Taxes
___________
State Tax
___________
State Tax
___________
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Take-home Pay
___________
Take-home Pay
____________
Pay per month:
___________
Pay per month:
___________
Total Taxes Paid
____________
Total Taxes Paid
____________
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Who pays the most taxes:
% Taxes Paid
% Income Earned
Top 1% of Income ($343,000 and up)
_____________
____________
Top 10% Income earners
_____________
____________
Bottom 50% Income earners
_____________
____________