1. Is equal and fair the same thing? Why?
2. Explain what Supreme Court Justice Oliver
Wendell Holmes meant by “Taxation is the price
we pay for civilization.” Do you agree? Explain.
3. Draw a symbol depicting each of Adam
Smith’s maxims. Next to each symbol describe
the maxim in your own words
4. Which of these two approaches to tax
equality do you find fairer? Ability-to-pay or
benefits received? Why.
5. How can taxes result in deadweight loss?
Name _______________________
date ______________
Tax base-what is taxed
Tax rate- percentage that is paid in tax
Tax structures
 Proportional taxes- same tax to all levels
 Progressive tax- more tax as income increases
 Regressive tax- less tax as income increases
Income tax- federal government and most states collect income tax
Pay roll tax- social security and Medicare
 Split evenly between employee and employer
 Fixed rate (12.4% and 2.9%)
 S.S. is capped at a certain amount making it regressive
Property tax- taxes on buildings and land
 Levied (voted on in an area)
 Proportional tax
Sales tax- regressive tax on bought good or services
Corporate taxes- tax on profits of corporations
Excise tax- taxes on things government wants to regulate
Luxury tax- tax on luxury goods and services
Fees and tolls- regressive tax goods and services used
Estate taxes- tax on assets left to heirs
Income tax with a marginal tax
Social Security tax
5 cent per dollar sales tax
Corporate income tax
Tax on jewelry
Park entry fee
Estate tax
Tax base
Tax structure
Fair or unfair? WHY
1. What is the difference between discretionary
and mandatory spending?
2. What are the top three areas of spending
(discretionary and mandatory) figure 12.4B
3. What are entitlement programs? Give some
4. Come up with a tax plan. Identify the tax base,
and tax structure. Describe what the tax
revenue will go towards, and who will be in
charge of spending the money (feds, state,
local). Finally explain why you feel the tax is fair.
Tax- 1 cent tax on every text message
Tax base- service
Tax structure- regressive
Tax towards education
State will collect and distribute to local school districts
It is fair because those who text more will pay more. Further more
help reduce texting in inappropriate situations (driving, in class, etc.)

12.2 232-236 Is equal and fair the same thing? Why? Explain what