Lecture 32 April 24 exam 3

Lecture 32 April 24 exam 3 - Announcements MT3 practice...

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Announcements MT3 practice problems are on BB Monday is review (and a little more about taxes) MT is next Wednesday (chs 11-18, a little on taxes). The final is cumulative. There may be some “repeat” questions. 1 of 35
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2 of 35 Taxes from Ch3 (p64) and Ch5 appendix (p120). But a lot of this stuff is not in the book.
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3 of 35 THE ECONOMICS OF TAXATION tax base The measure or value upon which a tax is levied. TAXES: BASIC CONCEPTS tax rate structure The percentage of a tax base that must be paid in taxes—25 percent of income, for example.
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TAXES Types of taxes The incidence of taxes The effect of taxes on behavior (distortion) 4 of 35
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TYPES OF TAXES Taxes on stocks Houses Cars Land WEALTH Taxes on Flows Income (Wages) Sales (Consumption) Profits Payroll 5 of 35
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6 of 35 TYPES OF TAXES Taxes on Flows Taxes on Economic “Flows”
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7 of 35 TYPES OF TAXES Federal Government Receipts 1960–2005 (billions of dollars) Individual Income Tax Corporation Income Tax Social Insur. Payroll Taxes Excise Taxes Other Receipts Total 1960 40.7 21.5 14.7 11.7 3.9 92.5 % 44.0 23.2 15.9 12.6 4.2 100 1970 90.4 32.8 44.4 15.7 9.5 192.8 % 46.9 17.0 23.0 8.1 4.9 100 1980 244.1 64.6 157.8 24.3 26.3 517.1 % 47.2 12.5 30.1 4.7 5.1 100 1990 466.9 93.5 380.0 35.3 56.2 1,032.0 % 45.2 9.1 36.8 3.4 5.4 100 2005* 893.7 226.5 773.7 74.0 84.8 2053.0 % 43.5 11.0 37.7 3.6 4.1 100 * OMB estimate Source: United States, Office of Management and Budget. Percentages may not add to 100 due to rounding. Note: most sales taxes are levied on a state level. Some states have no sales tax (Delaware).
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8 of 35 TYPES OF TAXES Proportional, Progressive, and Regressive Taxes proportional tax A tax whose burden is the same proportion of income for all households. The social security tax is proportional. progressive tax A tax whose burden, expressed as a percentage of income, increases as income increases. Other income tax is progressive.
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9 of 35 INCOME TAXES Individual Income Tax Rates, 2005 MARRIED COUPLES FILING JOINTLY TAXABLE INCOME TAX RATE $0 - 14,600 10% $14,601 – 59,400 15% $59,401 – 119,950 25% $119,951 – 182,800 28% $182,801 – 326,450 33% More than $326,450
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This note was uploaded on 08/15/2011 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

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Lecture 32 April 24 exam 3 - Announcements MT3 practice...

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