honors economics taxation
DESCRIPTION
HONORS ECONOMICS TAXATION. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. $. GOVERNMENT AS ORGANIZED CRIME. GOVERNMENT = ORGANIZED CRIME PROTECTION FOR MONEY ROVING BANDITS – TAKE 100 % OF THE WEALTH TAKE THE MONEY & RUN - PowerPoint PPT PresentationTRANSCRIPT
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HONORS ECONOMICSTAXATION
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GOVERNMENT = ORGANIZED CRIME PROTECTION FOR MONEY
ROVING BANDITS – TAKE 100% OF THE WEALTH TAKE THE MONEY & RUN
STATIONARY BANDITS – TAKE LESS THAN 100%
GOVERNMENT AS ORGANIZED CRIME
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ARE AMERICANS OVERTAXED?
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DEADWEIGHT LOSSESTAXES INCREASE PRICE OF GOODS & SERVICES
TAXING WAGES HIGHER PRICE FOR LABORTAXING CAPITAL HIGHER COST OF INVESTMENT
HIGHER PRICE LOWER QUANTITY DEMANDED REDUCTION IN SUPPLY LESS ECONOMIC ACTIVITY / LOWER GROWTH
TAX RATE
INCOME
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CURRENT BUDGET
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LAFFER CURVEGOVERNMENTS WANT TO MAXIMIZE REVENUES
REVENUES = TAX RATE * ECONOMIC ACTIVITYHIGHER TAXES LESS ECONOMIC ACTIVITY
LOWER NET REVENUE CUTTING TAXES MORE ECONOMIC ACTIVITY
HIGHER NET REVENUES
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VERTICAL AND HORIZONTAL EQUITYHOW DO YOU KNOW IF TAXES ARE FAIR?
VERTICAL EQUITY – SHOULD DIFFERENT INDIVIDUALS BE TAXED SIMILARLY OR DIFFERENT
• BENEFIT PRINCIPLE – TAXED RELATIVE TO BENEFITEx. TOLL ROADS, HUNTING LICENSES, SSI EXEMPTIONS
• ABILITY TO PAY PRINCIPLE – HIGHER INCOME = HIGHER TAX RATE**********************************
PROGRESSIVE : BURDEN HEAVIER ON HIGHER INCOMESEx. INCOME & CORPORATE TAXES
REGRESSIVE: BURDEN HEAVIER ON LOW INCOMESEx. PAYROLL & CONSUMPTION TAXES
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HORIZONTAL EQUITY: EQUAL INCOME = EQUAL TAXES $1 EARNED TEACHING = $1 EARNED NURSING
$1 SPENT ON CIGARETTES = $1 SPENT ON CANDY
EFFECTIVE CORPORATE TAX RATES ON DIFFERENT SECTORS, 1981AVERAGE 20.5 %
CAPITAL-INTENSIVE SECTORSMINING 9.4 %PAPER & LUMBER 4.0 %TRANSPORTATION -4.8 %UTILITIES 11.5 %AEROSPACE 13.5 %CHEMICALS 13.6 %
LABOR-INTENSIVE SECTORSPUBLISHING & PRINTING 36.3 %TOBACCO 31.4 %FOOD RETAILERS (GROCERY STORES) 30.8 %NON FOOD RETAIL (DEPARTMENT STORES) 22.0 %
HIGH TECHNOLOGYELECTRONICS & APPLIANCES 29.3 %OFFICE EQUIPMENT 26.7 %
FINANCIAL COMMERCIAL BANKS -12.6 %
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TYPES OF TAXESINCOME TAXES: (PROGRESSIVE) TAXES PROFITS OR NET INCOME FUNDS
FEDERAL DISCRETIONARY REVENUESPAYROLL TAXES: (REGRESSIVE) TAXES EARNINGS FOR NON-DISCRETIONARY
ENTITLEMENT PROGRAMS SUCH AS SOCIAL SECURITY & MEDICAID PROPERTY TAXES: (REGRESSIVE) TAXES THE ASSESSED VALUE OF ASSETS
INCLUDING REAL ESTATE FOR LOCAL GOVERNMENT EXPENSES SUCH AS SCHOOLS, FIRE, & POLICE DEPARTMENTS
EXCISE TAXES: (REGRESSIVE) “SIN” TAXES THAT TARGET CONSUMPTION OF SPECIFIC ITEMS SUCH AS TOBACCO, ALCOHOL, & IMPORTED GOODS.
SALES TAXES: (REGRESSIVE) TAXES SPENDING TO SUPPORT STATE & LOCAL GOVERNMENTS
USER FEES: TAXES SPECIFIC GOVERNMENT SERVICES TOLL ROADS (THRUWAY / BRIDGES), LICENSES (HUNTING / DRIVING)
INFLATION & INTEREST RATES : (PROGRESSIVE/REGRESSIVE)INFLATION SHIFTS WEALTH FROM CREDITORS DEBTORS INTEREST RATES SHIFT WEALTH DEBTORS CREDITORS
TYPE PROGRESSIVE/REGRESSIVE? WHAT DOES IT PAY FOR?
INCOME PROGRESSIVE GENERAL EXPENSES (DISCRETIONARY)
PAYROLL REGRESSIVE SOCIAL SECURITY; MEDICAID; MEDICARE (ENTITLEMENTS)
CORPORATE PROGRESSIVE GENERAL EXPENSES (DISCRETIONARY)
PROPERTY MIXED SCHOOL, FIRE & POLICE PROTECTION
CONSUMPTION (VAT, SALES) REGRESSIVE STATE & LOCAL GOVERNMENT SERVICES
EXCISE REGRESSIVE ROADS, HIGHER EDUCATION, HEALTH CARE
USER FEES MIXED FEE FOR SERVICE
(HIGH) INFLATION PROGRESSIVE EMPLOYMENT
(HIGH) INTEREST RATE REGRESSIVE INVESTMENT
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ARE AMERICAN TAXES FAIR?
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CORPORATE INCOME TAXESBUSINESSES ORGANIZE AS PARTNERSHIPS OR LIMITED
LIABILITY CORPORATIONS CORPORATIONS ARE “LEGAL INDIVIDUALS” THAT SHIELD
OWNERS (STOCKHOLDERS) FROM BUSINESS DEBTS & LOSSES**************
FOR THIS PRIVILEGE, GOVERNMENTS CHARGE A “FEE” BY TAXING CORPORATE PROFITS LIKE INDIVIDUAL INCOME
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HIGHER TAXES DISINCENTIVE TO INVESTMENT, CAPITAL ACCUMULATION & ECONOMIC GROWTH
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THEREFORE, GOVERNMENTS HAVE CUT CORPORATE TAXES TO PROMOTE ECONOMIC GROWTH
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CAPITAL GAINS TAXESCAPITAL GAIN = APPRECIATION IN VALUE IN AN ASSET
(STOCK) BETWEEN BUYING & SELLING
CONSERVATIVES “DOUBLE TAXATION” BECAUSE THEY ARE TAXED AS BOTH
a) CORPORATE INCOME b) CAPITAL GAINS
HOWEVER . . . – INDIVIDUALS CAN TIME WHEN TO “REALIZE” A CAPITAL GAIN BY
CHOOSING WHEN THEY MONETIZE (SELL) THEIR ASSET– CAPITAL GAINS TAXED LOWER THAN INCOME INVESTORS PAY
LOWER TAXES THAN WAGE EARNERS– CAPITAL DEPRECIATION / LOSSES ARE BOOKED CONTINUOUSLY
BY A STATUTORY AVERAGE SIGNIFICANT TAX ADVANTAGES
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PIGOVIAN & EXCISE TAXESWHEN A DEMAND CURVE IS VERTICAL, CHANGES IN PRICE
WILL NOT CHANGE THE QUANTITY DEMANDED“SIN TAXES” (EXCISE TAXES) ON ADDICTIVE
BEHAVIOR : TOBACCO, ALCOHOL, GASOLINE & GAMBLING = GOOD REVENUE SOURCES
INHERITANCE TAXES CANNOT AVOID DYINGYOU MAY ALSO TAX TO DISCOURAGE BEHAVIOR – FINES,
SPEEDING TICKETS, CARBON & CALORIE TAXESPIGOVIAN TAX: HIGHER TAXES = HIGHER SOCIAL
WELFARE ***********************************
TAX EXPENDITURE: TAX DEDUCTIONS TO ENCOURAGE BEHAVIOR: MORTGAGE INTEREST, HEALTH BENEFITS, EDUCATIONAL COSTS