types of taxes chapter 11. federal income taxes social security taxes medicare taxes state income...

Types of TaxesChapter 11

Federal Income TaxesSocial Security TaxesMedicare Taxes

State Income TaxesSales TaxExcise TaxProperty TaxesLocal Taxes

Federal, State & Local Taxes

Types of Taxes• Progressive Tax-

– As income ↑ => Average Tax Rate ↑– Example: U.S. Federal Income Tax

• Regressive Tax-– As income ↑ => Average Tax Rate ↓ – Example: Gasoline Tax, Bridge Tax

• Proportional Tax– Regardless of income level => Average Tax Rate unchanged– Example: Flat Income Tax, Corporate Taxes

• Excise Tax– Flat rate per unit => paid at purchase– Example: Gasoline ($0.50 per gallon), cigarettes (over $200 per pack)

• (both are also regressive taxes)

Some taxes can be two types!

Excise Taxes

Plus $1.01 per pack Federal Tax!

Tax Reading

2014 California State Income Tax

Tax Bracket (Single) Marginal Tax Rate

$0+ 1.00%

$7,582+ 2.00%

$17,976+ 4.00%

$28,371+ 6.00%

$39,384+ 8.00%

$49,774+ 9.30%

$254,250+ 10.30%

$305,100+ 11.30%

$508,500+ 12.30%

2013 - 2014

2013 Federal Tax Rate Brackets

Tax Rate Single Married filing Jointly or Qualifying Widow(er)

10% Up to $8,925 Up to $17,850

15% $8,926 – $36,250 $17,851 – $72,500

25% $36,251 – $87,850 $72,501 – $146,400

28% $87,851 – $183,250 $146,401 – $223,050

33% $183,251 – $398,350 $223,051 – $398,350

35% $398,351 – $400,000 $398,351 – $450,000

39.6% $400,001 + $450,001 +

Standard Deduction $6,100 $12,200

New top bracket

Bush Tax cuts are now permanent

http://www.paycheckcity.com/calculator/netpay/us/california/calculator.html

2 Wage Earners

John earns $500,000 Mary earns $60,000

Federal TaxesSocial Security MedicareCalifornia Tax

Yearly Bring Home PayMonthly Bring Home PayTotal Taxes Paid

Overall Tax % Rate

$151,026$7,254$9,995$52,830

$277,922$23,160$222,078

44.0%

$5,855$2,520$870$1,617

$49,137$4,094$10,863

18.0%

Who Pays Federal Income Taxes

• Top 1% of Taxpayers – Pay 38% of all taxes

– Earn 20% of all income

– 1.4 million households

– $343,000 + Up

• Top 10% of Taxpayers – Pay 70% of all income taxes

– Earn 46% of income

• Bottom 50% of Taxpayers – Pay 3% of Income Taxes

– Earn 13% of Income

– Below $33,000 ($16/hour working full time)

Death of Middle Class?

• http://www.pbs.org/newshour/bb/business/july-dec12/makingsense_10-16.html

Basic Income

• http://www.pbs.org/newshour/making-sense/why-americas-favorite-anarchist-thinks-most-american-workers-are-slaves/