Chapter 3.1 Finance

Chapter 3 - Income Tax

Our Tax System

Filing a Tax Return

Our Tax sytem

Things you want to know

• List the types of taxes and explain the purpose of each.

• Describe the US tax system and explain how it works

• In a free enterprise system, the government collects money from citizens and businesses in the form of taxes.

• These incoming taxes called revenue.

• The government spends the revenue received according to priorities set by Congress.

​

Types of taxes

Regressive taxes - take a smaller share of income as the amount of income grows
i.e. Sales tax

Regressive tax

Progressive tax

Types of Taxes

Progressive taxes - takes a larger share as the amount of income grows
i.e. - Federal taxes

Other Taxes

Proportional tax

Types of Taxes

Proportional taxes, or flat taxes, are taxes for which the rate stays the same regardless of one's income
i.e. Property Taxes

A luxury tax is imposed on certain items, such as yachts and private planes.
Capital gains taxes, value-added taxes, tariffs, license and registration fees, user fees and tolls are also collected for purposes of funding government spending

Open Ended

List three types of taxes levied in the United States

The IRS - governs it all
The Power to Pay Tax - what's this mean?

​- Paying your fair share
* Tax rates apply to income ranges or tax brackets
Our income tax system is based on voluntary compliance, which means that all citizens are expected to prepare and file tax returns of their own accord.

​

How the system Works

​Failure to pay taxes can result in interest charges on taxes owed, plus a possible fine.
Willful failure to pay taxes is called tax evasion, which is serious crime punishable by a fine, imprisonment, or both.

​

Yes something happens if you don't pay taxes

an irs audit

• Every year, the IRS calls millions of taxpayers for an audit, which is an examination of their tax returns.

• Types of audits

  • Correspondence audit

  • Office audit

  • Field audit

Open Ended

Provide me with one definition from the section 3.1