2-2 unearned income and payment - name private and government sources of unearned income - list the...
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2-2 UNEARNED
INCOME AND PAYMENT- NAME PRIVATE AND GOVERNMENT SOURCES OF
UNEARNED INCOME
- LIST THE TYPES OF TAXES LEVIED AGAINST
INDIVIDUALS AND BUSINESSES
- DISCUSS THE BENEFITS OF PAYING TAXES, BOTH
DIRECT AND INDIRECT
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WHAT IS UNEARNED INCOME•UNEARNED INCOME IS MONEY RECEIVED FROM SOURCES OTHER
THAN WORKING IN A JOB, EITHER FOR YOURSELF OR FOR SOMEONE ELSEEarned Income Unearned Income Variagle Income
Salaries and wagesTipsCommissionsBonusesProfessional fees
InterestDividendsCapital gainsGambling winningsAlimonySocial security benefitsPensionsAnnuitiesUnemployment compensation
Business profitsRentsRoyaltiesFarm Income
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PRIVATE SOURCES• INTEREST IS MONEY EARNED ON SAVINGS ACCOUNTS AND OTHER FUNDS
•DIVIDENDS IS A PORTION OF A CORPORATION’S PROFITS DISTRIBUTED TO STOCKHOLDERS.
• PENSION PAYMENTS OR OTHER RETIREMENT BENEFITS FROM AN EMPLOYER PENSION FUNDS OR INDIVIDUAL RETIREMENT ACCOUNTS
•WINNINGS OR PRIZES FROM THE LOTTERY OR OTHER CONTESTS
• VARIABLE INCOME REFERS TO MONEY RECEIVED FOR SOME TYPE OF ACTIVITY OTHER THAN FROM WORKING UNDER THE DIRECT CONTROL OF ANOTHER PERSON OR COMPANY. IT IS UNPREDICTABLE
• ROYALTIES ARE PAYMENTS FOR THE USE OF COPYRIGHTED MATERIAL
• RENT
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GOVERNMENT TRANSFER PAYMENTS
• TRANSFER PAYMENTS ARE MONEY AND BENEFITS RECEIVED FROM LOCAL, STATE, AND FEDERAL GOVERNMENT. THEY ARE FUNDED THROUGH TAXES
• TEMPORARY ASSISTANCE FRO NEEDY (TANF)
• MEDICAID
• VETERANS’ BENEFITS
• SUPPLEMENTAL SECURITY INCOME (SSI)
• STATE-PROVIDED MEDICAL PLANS
• SOCIAL SECURITY & MEDICARE – ENTITLEMENT PROGRAMS IN WHICH YOU GET SOMETHING BACK BECAUSE YOU CONTRIBUTED THROUGH TAXES
• UNEMPLOYMENT COMPENSATION
• WORKERS’ COMPENSATION
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IN-CASH AND IN-KIND PAYMENTS• IN-CASH PAYMENTS ARE MONEY IN THE FORM OF CHECK, DEBIT
CARD, OR OTHER DIRECT PAYMENT GIVEN TO A PERSON NEEDING ASSISTANCE
• EXAMPLES: SOCIAL SECURITY PAYMENTS, UNEMPLOYMENT BENEFITS, AND WORKER’S COMPENSATION
• IN-KIND PAYMENTS ARE MADE INDIRECTLY ON A PERSON’S BEHALF OR PAID IN A FORM OTHER THAN MONEY TO THOSE IN NEED.
• FOOD STAMPS, RENT SUBSIDIES, AND VOUCHERS THAT CAN BE EXCHANGED FOR GOODS AND SERVICES
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INDIRECT TAXES• INDIRECT TAXES ARE CHARGED ON THE PRICE OF A GOOD OR
SERVICE AND REMITTED TO THE GOVERNMENT BY THE SELLING BUSINESS.
• USE TAXES ARE PAID BY PEOPLE WHO USE CERTAIN GOODS OR SERVICES PROVIDED BY THE GOVERNMENT. AN EXAMPLE IS PEOPLE THAT VISIT STATE OR NATIONAL PARKS MAY BE CHARGED A USE TAX.
• EXCISE TAXES ARE CHARGED ON THE PURCHASE OF SPECIFIC GOODS, SUCH AS GASOLINE, CIGARETTES, AND ALCOHOLIC BEVERAGES
• SALES TAXES ARE ADDED TO THE PURCHASE OF CONSUMER GOODS AND SERVICES. SALES TAX IS A PERCENTAGE OF THE COST OF THE PURCHASE PRICE.
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DIRECT TAXES•DIRECT TAXES ARE PAID BY CONSUMERS TO THE GOVERNMENT.
• INCOME TAXES IS PAID BY CONSUMERS ON EARNED AND UNEARNED INCOME. IT IS A PROGRESSIVE TAX BECAUSE THE MORE YOU EARN, THE MORE YOU PAY IN TAX.
• PROPERTY TAXES ARE WEALTH TAXES BASED ON THE ASSESSED VALUE OF OWNED REAL ESTATE.
• ESTATE TAX OR THE STATE INHERITANCE TAX. THESE TAXES ARE LEVIED AGAINST THE ESTATE OF A PERSON, WHO HAS DIED OR THE PERSON WHO INHERITS THE DECEASED’S MONEY OR PROPERTY.
• GIFT TAX IS LEVIED BY THE FEDERAL GOVERNMENT TO THOSE WHO GIVE MORE THAN $13,000 TO ANY PERSON WITHIN A TAX YEAR.
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HOW DOES RAISING OR LOWERING THE TAXES AFFECT THE GOVERNMENT?
•PAYING TAXES REDUCES THE DISPOSABLE INCOME OF AN INDIVIDUAL. THE MORE TAXES A PERSON PAYS, THE LESS MONEY HE OR SHE HAS AVAILABLE TO SAVE OR SPEND.
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DIRECT BENEFITS FROM PAYING TAXES• PAYING TAXES BENEFIT THE PERSON MAKING THE PAYMENTS AND OTHERS
WHO DO NOT MAKE PAYMENTS. EXAMPLE: SOCIAL SECURITY TAX PROVIDES O SYSTEM OF OLD AGE, SURVIVORS, AND DISABILITY ASSISTANCE.
• TAXES ALSO PROVIDE PUBLIC GOODS – GOODS AND SERVICES PROVIDED BY GOVERNMENT. EXAMPLES INCLUDE NATIONAL DEFENSE, PUBLIC EDUCATION, POLICE PROTECTION, NATIONAL PARKS, AND ROADS AND HIGHWAYS. PUBLIC GOODS HAVE 3 UNIQUE QUALITIES:
• EVERYONE BENEFITS
• NO ONE CAN BE EXCLUDED
• PEOPLE DO NOT BENEFIT IN PROPORTION TO TAXES PAID
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INDIRECT BENEFITS FROM PAYING TAXES
•WE RECEIVE INDIRECT BENEFITS WHEN SOCIETY AS A WHOLE BENEFITS FROM INCREASED STANDARDS OF LIVING, CURES FOR DISEASES, AND SO ON.