Types of Taxes Chapter 11. Federal Income Taxes Social Security Taxes Medicare Taxes State Income...
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Transcript of Types of Taxes Chapter 11. Federal Income Taxes Social Security Taxes Medicare Taxes State Income...
Types of TaxesChapter 11
Federal Income TaxesSocial Security TaxesMedicare Taxes
State Income TaxesSales TaxExcise TaxProperty TaxesLocal Taxes
Federal, State & Local Taxes
Types of Taxes• Progressive Tax-
– As income ↑ => Average Tax Rate ↑– Example: U.S. Federal Income Tax
• Regressive Tax-– As income ↑ => Average Tax Rate ↓ – Example: Gasoline Tax, Bridge Tax
• Proportional Tax– Regardless of income level => Average Tax Rate unchanged– Example: Flat Income Tax, Corporate Taxes
• Excise Tax– Flat rate per unit => paid at purchase– Example: Gasoline ($0.50 per gallon), cigarettes (over $200 per pack)
• (both are also regressive taxes)
Some taxes can be two types!
Excise Taxes
Plus $1.01 per pack Federal Tax!
Tax Reading
2014 California State Income Tax
Tax Bracket (Single) Marginal Tax Rate
$0+ 1.00%
$7,582+ 2.00%
$17,976+ 4.00%
$28,371+ 6.00%
$39,384+ 8.00%
$49,774+ 9.30%
$254,250+ 10.30%
$305,100+ 11.30%
$508,500+ 12.30%
2013 - 2014
2013 Federal Tax Rate Brackets
Tax Rate Single Married filing Jointly or Qualifying Widow(er)
10% Up to $8,925 Up to $17,850
15% $8,926 – $36,250 $17,851 – $72,500
25% $36,251 – $87,850 $72,501 – $146,400
28% $87,851 – $183,250 $146,401 – $223,050
33% $183,251 – $398,350 $223,051 – $398,350
35% $398,351 – $400,000 $398,351 – $450,000
39.6% $400,001 + $450,001 +
Standard Deduction $6,100 $12,200
New top bracket
Bush Tax cuts are now permanent
http://www.paycheckcity.com/calculator/netpay/us/california/calculator.html
2 Wage Earners
John earns $500,000 Mary earns $60,000
Federal TaxesSocial Security MedicareCalifornia Tax
Yearly Bring Home PayMonthly Bring Home PayTotal Taxes Paid
Overall Tax % Rate
$151,026$7,254$9,995$52,830
$277,922$23,160$222,078
44.0%
$5,855$2,520$870$1,617
$49,137$4,094$10,863
18.0%
Who Pays Federal Income Taxes
• Top 1% of Taxpayers – Pay 38% of all taxes
– Earn 20% of all income
– 1.4 million households
– $343,000 + Up
• Top 10% of Taxpayers – Pay 70% of all income taxes
– Earn 46% of income
• Bottom 50% of Taxpayers – Pay 3% of Income Taxes
– Earn 13% of Income
– Below $33,000 ($16/hour working full time)
Death of Middle Class?
• http://www.pbs.org/newshour/bb/business/july-dec12/makingsense_10-16.html
Basic Income
• http://www.pbs.org/newshour/making-sense/why-americas-favorite-anarchist-thinks-most-american-workers-are-slaves/