KECSS Ms. MurrenEconomics 1/9/12

Outcome: SWBAT compare the different types of taxes

Mini Lesson

Where does the government get it’s funds

◦From the tax payers: individuals, corporations and small businesses

Mini Lesson- Taxation Principles

Benefits-received principle Ability to pay principle

A system of taxation in which those who use a particular government service support it with taxes in proportion to the benefit they receive; those who don’t use a service do not pay taxes to use it.

◦ Ex. A gasoline tax used to pay for highway construction.

A principle of taxation in which those with higher incomes pay more taxes than those with lower incomes, regardless of the number of government services they use.

◦ Ex. Property taxes of home owners fund the local school district

Mini Lesson- Forms of Taxation

There are three major forms of taxation

◦Proportional

◦Progressive

◦Regressive

Mini Lesson- Proportional Taxes

What is a proportional tax?

◦A tax that takes the same percentage of all incomes; as income rises the amount of tax paid also rises

Mini Lesson- Progressive Taxes

What is a progressive tax?

◦A tax that takes a larger percentage of higher incomes than lower incomes; justified on the basis of the ability to pay principle

◦Ex. Income tax. The higher your gross income the larger the percentage of tax paid- It is justified using the ability to pay principle

Mini Lesson- Regressive Tax

What is a regressive tax?

◦A tax that takes a larger percentage of lover incomes than of higher incomes.

◦Ex. Food is arguably the best example of a regressive tax. The poor spend a larger portion of their income on food than the rich and so taxes on food affect the poor more negatively than the rich.

Group Application andCritical Thinking Summary

Students will complete activity sheets

Critical Thinking Summary