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Ch. 25
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*Personal income: Tax on an individual’s yearly income.
*Granted by the 16th amendment
*April 15th is income tax day.
*Corporate income: Tax on a corporation’s profit.
*Social Insurance: Social security tax. (FICA).
*Excise: Special tax on alcohol, tobacco, and gasoline.
*Estate: Tax on the assets of the deceased.
*Inheritance: Tax paid on anything person inherits.
*Gift: Tax paid on the value of an expensive gift
received.
*Sales: Tax paid on all purchases.
*Property: Tax on the value of property. Can include
buildings, stocks, bonds, cars.
*
*Revenue: Money the government receives.
*Expenditures: Money the government spends.
*60 to 80 percent of state and local government
revenue comes from taxation.
*Intergovernmental Revenue: Money received from
other governments.
*Example: States receive a big chunk of money
from the Federal Government. Local governments
then can get some of that money from the state.
*Nearly 100 percent of federal government revenue
comes from taxes.
*
*The government sometimes abuses its power to
tax which leads to revolts.
*Stamp Act (1765): British tax on virtually all
goods.
*Tea Act (1773): British tax on tea. Led to the
Boston Tea Party.
*British taxes lead to the American Revolution
where the United States became a free country
after defeating England.
*
*Shay’s Rebellion (1786):
Heavy state taxes in
Massachusetts put many farmers in debt. Daniel
Shay led a group of 1,200 farmers in a revolt.
The revolt was put down.
*Tariff of 1828:
High tariff on imports. Hurt the
southern states because of lack of industries.
Secession was openly discussed in South Carolina.
*Tariff:
Tax on imports.
*Secession:
Separate from the nation.
*
*The first government of the United States was the
Articles of Confederation.
*The national government could not tax under the
Articles.
*Under the Constitution, the government is given a
limited power to tax to keep it from abusing its
power.
*
*The Constitution gives the government the
power to tax.
*All appropriations bills (tax bills) are introduced
in the House of Representatives.
*Appropriations bills are laws that allow
spending for a particular activity
*All national taxes are the same throughout the
country.
*The 14th amendment says all groups must be
taxed equally.
*
*Progressive tax:
Based on income. Higher
taxes on those with higher incomes. Those who
make less than a certain minimum pay no taxes.
*Regressive tax:
People pay the same amount
with no consideration of income.
*Effects people with lower incomes because
it’s a larger percentage of their total income.
*Proportional tax:
of all incomes.
Takes the same percentage
*
*Tax on income
*16th amendment (1913):
Gave the government the
power to collect income tax.
*Personal income and corporate income are the two
types.
*
*The deadline is April 15th.
*All taxpayers fill out a tax return form and send it to
the Internal Revenue Service (IRS).
*An exemption is a portion of income that is not
taxed.
*Deductions are for medical expenses and charitable
contributions. They are not taxed.
*Everything else is taxable income.
*
*Tax paid at the time of purchase.
*The revenue is sent to state and local
governments.
*Many state governments exclude necessary items
from the sales tax.
*North Carolina is the 1st Friday in August
*
*Employers withhold funds from checks to pay the
state and national government.
*Because of this, taxpayers do not pay as much at
the end of the year.
*Some taxpayers receive a refund.
*
*People with higher incomes pay a higher percentage
in taxes.
*There are tax percentage rates of 10%, 15%, 25%,
28%, 33%, and 35%.
*The belief is that people with less money need more
for necessities.
*
*The property is examined to assess the value.
*Local governments set the tax rate.
*Property taxes have increased steadily over the
years.
*
*Designed to raise revenue and protect American
businesses.
*Products are made cheaper in other countries and
brought to America.
*When America charges a tariff, the other country
charges a tariff on American goods.
*Tariffs have caused many problems in U.S. history.
*
*The government will sell and rent land.
*The government will charge tolls for the use of
roads and canals.
*The government will charge fees for driving,
hunting, fishing, and getting married.
*Charge fines (traffic).
*Government run lotteries to provide revenue, but
they are controversial.
Answer the following on a separate piece
of paper and turn in -
*In at least 2 paragraphs, explain which tax
classification you feel is the most fair? Give
at least 3 reasons why.
*If the federal government needed to
increase their revenue, which kind of tax
(ex. Sales, excise, estate, income…..) do
you think it should increase? Why? 1-2
paragraphs