Civics - Taxes

Taxation

The Economy

- and -

Government Funding

The Cost of Government

It costs an enormous amount of money to run the government.

​

One reason it costs so much is that the United States serves larger population than ever before.

​

Not only does it serve a larger number of people, but today, the government provides many more programs and services than in the past.

The Power to Tax

The power to tax is given to Congress by the Constitution. It says...

​​

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States

​

In the United States, the government taxes for 2 reasons:

1. To raise money to operate the government

2. To regulate or discourage activity that may be harmful to the public

Tax Structures

Tax Rate = the % the money is being taxed

Base Amount = the $ that is being taxed

​​

Progressive Tax - the tax rate (%) increases as the taxable base amount increases

​

Regressive Tax - the tax rate (%) decreases as the taxable base amount increases

​

Flat (or Fixed) Tax - the tax rate (%) remains the same regardless of the taxable base amount

Types of Taxes (cont.)

These taxes can be direct or indirect

​

Direct Tax - assigned to one individual who pays it directly to the government (example - income tax)

​

Indirect Tax - tax levied indirectly on the consumer, by the merchant/producer (example - sales tax)

​

​

Income Tax

Income Tax is the largest source of federal revenue in the United States.

It is a tax on the earnings (the income) of individuals and businesses.

​

The Income Tax system in the United States is Progressive (the tax rate increases as income levels increase) and it is Direct (it is assigned to a specific person and paid straight to the government)

​​

​The filing deadline to submit 2021 tax returns is Monday, April 18, 2022.

​

As most people know, Tax Day is usually on April 15, unless it falls on a weekend or holiday, in which case it's pushed back to the next available business day. April 15 is on a Friday this year, so the weekend rule doesn't apply. However, Emancipation Day is being observed in the District of Columbia on April 15. The holiday honors the end of slavery in Washington, D.C. Since April 15 is a legal holiday in D.C., the IRS can't require tax returns be filed that day. The next business day is April 18 – so that becomes Tax Day in 2022 for most people.

​

​This table would be

used for taxes that

are due in April

2023.​

Other Major Taxes

Social Security Tax - this is taken out of your paycheck to provide income to retired persons

​

State/Local Tax - Most state and local governments also take income tax. Pennsylvania collects state and local income tax!

​

Corporate Tax - Like income tax, this is a tax paid by businesses on their profits

​

Sales Tax - A tax collected on products sold. Not all states collect this, but Pennsylvania does! It is 6% plus 1% for all purchases made in Allegheny County.

​

Property Tax - A tax on the value of a property owned by a person or business. This is a main source of revenue for local governments.

​

Import Tax - Collected by the Us government on goods imported from foreign countries.

***They are called Tariffs