taxes & inflation
TRANSCRIPT
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Taxes & Inflation
http://online.wsj.com/article/SB10001424052748704358904575477592541210592.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond
http://online.wsj.com/article/SB10001424052748704358904575477593075638722.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond
http://online.wsj.com/article/SB10001424052748704206804575467920711270954.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecondEstate tax articles
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Before we look at taxation, a few words on inflation……………………….
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• Demand pull• Demand-Pull Inflation:
– Too many dollars chasing too few goods
3-Types of Inflation
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• Cost-Push Inflation– Increase in cost of any factors of production – examples: price of oil, wages, steel, etc….
3-Types of Inflation
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Money Supply Inflation
• 3-Types of Inflation
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Who is Helped by inflation?
• People in large amount of Debt – Large Mortgages, Car Loans, Student Loans
If you owe1 million dollars
Inflation lets you pay yourdebt back in inflated dollars
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Who is Hurt by Inflation?
• People on a fixed income
If you receive$1,000 a month
(for life)
Inflation lowersyour purchasing power
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Why is inflation Bad?
• Difficult for Business to plan & price goods/services
• Difficult to fight once it begins to rise
Will Fiscal & Monetary policy today cause inflation in 5-years?
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So why do we pay taxes anyway?
Okay now, back to taxes……….
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The Government BudgetGovernment SpendingGovernment Revenue
Taxes All Gov’t Expenses
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What do we get for our tax money?
• Airports• Police• Fire
department• Libraries• parks
•Military•federal law enforcement•post office•diplomatic relations•food and drug safety•interstate highways
•K-12 education•Higher education•state parks•environmental protection•DMV•state highways
National State Local
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Types of Taxes
• Flat (Proportional)--Same % for everyone
--Example: Sales Tax
• Progressive- --Higher % for higher income workers --Example: Income Taxes
• Regressive- --Consumes larger % of lower income workers’ salary --Example: Alcohol excise tax
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Federal Income Tax
• Progressive Income Tax
As income % Tax Rate
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+
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Progressive Taxes in “action”
Example: If you Earn $100,000 (single)($ 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%
Tax Rate Single
10% $0 – $8,350
15% $8,351– $33,950
25% $33,951 – $82,250
28% $82,251 – $171,550
33% $171,551 – $372,950
35% $372,951+
EVERY taxpayer pays10% on first $8,350 of income
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Who pays the most?
• Top 1% of Taxpayers ($295,000 + Up)– Pay 34% of all taxes
• Top 5% of Taxpayers ($121,000 + Up)– Pay 55% of all income taxes
• Bottom 50% of Taxpayers ($27,000 + Below)– Pay 4% of Income Taxes
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#1: Why do people pay taxes?
The government uses the money to provide various services.
Review Quiz
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Trade Quiz
#2: What are the three types of taxation?
ProgressiveFlat/proportionalRegressive
Review Quiz
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What are some of the other taxes people pay, and which type of tax are they?
Tariffs
Medicare Tax
Social Security Tax
Property taxes
Excise Tax on tobacco
Inheritance/Gift Taxes
Proportional (flat)
Proportional (flat)
Regressive
Progressive (broadly speaking)
Proportional (flat)
Proportional (flat)
Specific TaxType of Tax—Proportional,
regressive, progressive?
Level of gov’tthat collects the tax--state, local, nat’l
Nat’l
State/Nat’l
Nat’l
Local
Nat’l
State/Nat’l
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Tax Worksheet
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Money Supply inflation
2-Types of Inflation
Tech Ticker debate on inflationBakery example