how can the u.s. significantly decrease the deficit
DESCRIPTION
How can the U.S. significantly decrease the deficit. 1) 2) 3) 4). Taxes. Spending. Tax Rate Introduction. U.S. Federal Income Tax System. 3 Types of Taxes. Progressive- Tax rate increase as income increases Example: Income Taxes Regressive- - PowerPoint PPT PresentationTRANSCRIPT
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How can the U.S. significantly decrease the deficit
1)2)3)4)
Taxes
Spending
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Tax Rate IntroductionU.S. Federal Income Tax System
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3 Types of Taxes
• Progressive-– Tax rate increase as income increases– Example: Income Taxes
• Regressive-– Consumes larger % of lower income worker’s salary– Example: Gasoline Tax, Bridge Tax
• Flat– Same % for everyone– Example: Sales Tax, Some State income taxes
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Purpose/Goalsof an INCOME TAX
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Tax Worksheet
• History of Income Taxes
• Taxes people pay
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Federal Income Tax
• Progressive Income Tax
As income % Tax Bracket
Tax Rate
SingleMarried Filing
Jointly
10% $0 – $8,350 $0 – $16,700
15% $8,351– $33,950 $16,701 – $67,900
25% $33,951 – $82,250 $67,901 – $137,050
28% $82,251 – $171,550 $137,051 – $208,850
33% $171,551 – $372,950 $208,851 – $372,950
35% $372,951+ $372,951+
EVERY taxpayer pays10% on first $8,350 of income
Example: If you Earn $100,00 (single)($ 8,350 - 0 ) x .10 : $ 835(33,950 - 8,351) x .15 : 3,840(82,250 - 33,951) x .25 : 12,075(100,000 - 82,251 ) x .28 : 4,970 Total: $ 21,720 or 21.7%
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http://www.paycheckcity.com/calculator/netpay/us/california/calculator.html
2 Wage Earners
John earns $360,000 Mary earns $60,000
Federal TaxesSocial Security MedicareCalifornia Tax
Take Home PayPay Per MonthTotal Taxes Paid
Overall Tax % Rate
$91,025$4,485$5,220$32,123
$226,965$18,913$133,035
37.0%
$5,855$2,520$870$1,617
$49,137$4,094$10,863
18.0%
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Numbers to Know for Exam
• Top 1% of Taxpayers ($343,000 + Up)
– Pay 38% of all taxes
– Earn 20% of all income (1.4 million households)
• Top 10% of Taxpayers ($115,000 + Up)
– Pay 70% of all income taxes
– Earn 46% of income
• Bottom 50% of Taxpayers ($33,000 + Below)
– Pay 3% of Income Taxes
– Earn 13% of Income
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Top 1% pay more taxes but
The income Gap has
widened last30-Years
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EQUAL % tax cuts
What best stimulates economic growth?
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Equal % Tax Cuts
• Example: 10% tax cut for ALL taxpayers
• Who gets more nominal dollars (money)
Earn $120,000 Taxes $36,000 Refund $3,600
Earn $24,000 Taxes $3,000 Refund $300
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Fiscal Cliff December 2012
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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
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