Direct and Indirect Taxes By: Edmond, Max, and Russell Hold on tight, we are going on a ride https://www.youtube.co m/watch?v=6Q3NPgHZ zDo Proportional Taxes Imposes the same tax rate on all levels of income Everyone is treated equally A Sales Tax can be considered a type of Proportional Tax since all consumers are required to pay the same Progressive Taxes The more money you make, the more you will be taxed. A tax that imposes a higher percentage rate of taxation on higher incomes than the lower ones. Affects the wealthy more than the lower class Regressive Taxes A tax that imposes a higher percentage rate of taxation on lower incomes A tax that is applied uniformly, hits the lower income individuals harder Proportional, Progressive, Regressive Direct vs. Indirect Tax Structures A direct tax is a tax that is imposed or collected on a specific group of people or organizations. An example of this would be income tax. Indirect tax is a tax that is just collected and is the same for everyone. And example of this would be sales taxes, goods and service tax. Federal Government Revenue Sources The three main sources of federal tax revenue are individual income income taxes, payroll taxes, and corporate income taxes. Some other sources of tax revenue include excise taxes, FICA, social security, and estate taxes. Did you know that 46% of all federal revenue comes from individual income taxes?! Income Tax An income tax is a tax that is placed on the taxpayer based on their income/profits. The income tax is determined by applying a tax rate which will increase based on income increase. IRS Announces 2015 Tax Brackets FICA The second most important federal revenue source is the FICA. Federal Insurance Contributions Act Tax Levied on employers and employees equally to pay for Social Security and Medicare Social Security A tax that has been placed on employers and employees used to fund the social security program. Normally collected as a payroll tax or a self employment tax. Social security tax pays for all retirement and disability benefits that many americans receive. Corporate Corporate tax is a tax placed on the total income of a corporation. These taxes can vary from 15% to 39% Some corporate transactions are not taxable. These include most formations and some types of mergers, acquisitions, and liquidations. Estate and Gift Estate tax is the tax on the transfer of property when a person dies. Includes everything a person owned Can range from percent of value of estate Gift tax is a tax on the transfer of money or wealth and is paid by the person who makes the gift Used to make sure they wealthy people do not try to avoid taxes by giving away there estates before they die Excise Excise tax is a tax paid when purchases are made on certain goods. This taxed is placed on most manufactured goods such as clothes. The tax percentage can vary based on your state. State and Local Government Revenue Sources Local taxes are taxes that are due in addition to state and federal taxes. These can be in the form of property, sales, water, sewer, school, and occasionally, income taxes. Funds generated help cover community services such as public school related expenses. Floridas Taxes Sales Taxes State Sales Tax: 6% (food, prescription and nonprescription drugs are exempt) Personal Income Taxes No state income tax Property Taxes All property is taxable at 100% of it's just valuation. Every person who owns and resides on real property in Florida on January 1 and makes the property their permanent residence is eligible to receive a homestead exemption up to $50,000. Floridas Taxes Estate Tax Florida does not have an estate or inheritance tax. Corporate Income Tax The Florida Corporate Income Tax is 5.5% Sole proprietorships, individuals, estates of decedents, and testamentary trust are exempted and do not have to file a return. Intangibles Tax Florida no longer has a tax on intangible good such as investments. The law that required this was repealed in 2007. Taxation Word Search Activity Answer Key Citation Page https://www.irs.gov/Individuals/International-Taxpayers/Social-Security-Tax---Medicare-Tax-and-Self-Employment