Chapter 12 Lecture Outline - Economics 101H Vandan Desai...

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Economics 101H Vandan Desai P a g e | 1 Chapter 12: The Design of the Tax System (Lecture Outline) -------------------------------------------------------------------------------------------------------------------------- I. The Financial Overview of the U.S. Government A. As the economy’s income has grown , the government has grown even more B. As a nation gets richer , the govt. typically takes larger share of income in taxes C. The Federal Government i. The U.S. federal government collects about 2/3 of the taxes in our economy ii. Receipts: Largest source of revenue for the federal government is the individual income tax Income tax liability —how much owe—not just based on proportion of income, but total income number of children certain expenses deemed “deductable” (such as mortgage interest payment, charitable) Individual Income Taxes a. Marginal tax rate —tax rate applied to each additional dollar of income (person with million dollars still pays only 15% of the first $27,050) b. Higher-income families pay a larger percentage of their income in taxes The Federal Government and Taxes a. Payroll Taxes: tax on the wages that a firm pays its workers i. Social Insurance Taxes: taxes on wages that is earmarked to pay for Social Security and Medicare b. Government taxes each corporation based on its profit i. In essence, taxes twice —once when corporation earns profits and then again when corporation uses its profits to pay dividends to its shareholders c. Other taxes i. Excise Taxes: taxes on specific goods like gasoline, cigarettes, and alcoholic beverages ii. Estate taxes and custom duties iii. Spending: Government spending includes
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This note was uploaded on 10/31/2010 for the course ECON 202 taught by Professor - during the Fall '08 term at Community College of Baltimore County.

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Chapter 12 Lecture Outline - Economics 101H Vandan Desai...

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