& Taxation Government Spending. Taxation Why Taxes?
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Transcript of & Taxation Government Spending. Taxation Why Taxes?
& Taxation& Taxation
Government SpendingGovernment Spending
TaxationTaxation
Why Taxes?Why Taxes?
Government Expenses
Mandatory
EntitlementsInterest on DebtOperating Budget
Discretionary
should we or shouldn't we?
Why so much Political Debate?Why so much Political Debate? Discretionary spendingDiscretionary spending – should we – should we
or shouldn't we?or shouldn't we?• Capital budgetCapital budget – major projects – major projects• Defense, EducationDefense, Education• Tax incentivesTax incentives to encourage certain to encourage certain behaviors – behaviors – tax credits or exemptionstax credits or exemptions
Shouldn’t we work towards a Shouldn’t we work towards a balanced budgetbalanced budget??
Tax BaseTax BaseAreas subject to taxationAreas subject to taxation Income (city, state, federal)Income (city, state, federal) Sales (state)Sales (state) Property (local)Property (local) Corporate income tax Corporate income tax
(business profits)(business profits)
Tax StructuresTax Structures Progressive Progressive - - percentage percentage
increases as income increases – increases as income increases – income tax (income tax brackets)income tax (income tax brackets)
Proportional Proportional – – flat tax – same flat tax – same percentage regardless of income percentage regardless of income (property tax) (property tax)
Regressive Regressive – – smaller percentage smaller percentage of income is taken in taxes as of income is taken in taxes as income increases – (sales tax)income increases – (sales tax)
Progressive StructureProgressive Structure
1616thth Amendment: Amendment: The The Congress shall have power to Congress shall have power to
lay and collect taxes on lay and collect taxes on incomes, from whatever incomes, from whatever source derived, without source derived, without
apportionment among the apportionment among the several States, and without several States, and without
regard to any census or regard to any census or enumeration.enumeration.
Income TaxIncome Tax
Federal TaxesFederal Taxes Why is there money taken out of my check? Why is there money taken out of my check?
W4 – withholdings How much of my salary is taxed?How much of my salary is taxed?
W2 – taxable income Doesn’t the government realize that I need my salary Doesn’t the government realize that I need my salary
to live? -to live? -Personal exemption What about other expenses too, like work related What about other expenses too, like work related
uniform costs, or education? – uniform costs, or education? – deductions How much in total do I have to pay the government?How much in total do I have to pay the government?
Tax schedule - Brackets What if I have paid them too much- What if I have paid them too much-
1040ez - tax return (refund?)
2013: $3,900
Personal ExemptionPersonal Exemption
Individuals are entitled to claim a personal exemption for themselves and any dependents they support.
2013: $3,9002012: $3,8002011: $3,7002010: $3,6502009: $3,6502008: $3,500
DeductionsDeductionsShould I Itemize? Topic 501
Medical and Dental Expenses Topic 502
Deductible Taxes Topic 503
Home Mortgage Points Topic 504
Interest Expense Topic 505
Charitable Contributions Topic 506
Miscellaneous Expenses Topic 508
Business Use of Home Topic 509
Business Use of Car Topic 510
Business Travel Expenses Topic 511
Business Entertainment Expenses Topic 512
Educational Expenses Topic 513
Employee Business Expenses Topic 514
Casualty, Disaster, and Theft Losses (Including Federally Declared Disaster Areas)
Topic 515