Chapter 14 Taxes and Government Spending Section 1
![Chapter 14: Taxes and Government Spending Section 1 Chapter 14: Taxes and Government Spending Section 1](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-1.jpg)
![Objectives 1. Identify the sources of the government’s authority to tax. 2. Describe types Objectives 1. Identify the sources of the government’s authority to tax. 2. Describe types](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-2.jpg)
![Key Terms • tax: a required payment to a local, state, or national government Key Terms • tax: a required payment to a local, state, or national government](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-3.jpg)
![Key Terms, cont. • tax base: the income, property, good, or service that is Key Terms, cont. • tax base: the income, property, good, or service that is](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-4.jpg)
![Introduction • What are the features of a tax system? – Fairness – Simplicity Introduction • What are the features of a tax system? – Fairness – Simplicity](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-5.jpg)
![Government’s Authority to Tax • We authorize the federal government, through the Constitution and Government’s Authority to Tax • We authorize the federal government, through the Constitution and](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-6.jpg)
![Limits on the Government • There also limits on the government’s power to tax. Limits on the Government • There also limits on the government’s power to tax.](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-7.jpg)
![Progressive Taxes • Economists describe taxes based on their structure and according to the Progressive Taxes • Economists describe taxes based on their structure and according to the](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-8.jpg)
![Other Taxes • A proportional tax is a tax for which the percentage of Other Taxes • A proportional tax is a tax for which the percentage of](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-9.jpg)
![Tax Bases • Different taxes have different tax bases. – The individuals income tax Tax Bases • Different taxes have different tax bases. – The individuals income tax](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-10.jpg)
![Elasticities of Demand Tax Effects • Taxes affect more than just the people who Elasticities of Demand Tax Effects • Taxes affect more than just the people who](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-11.jpg)
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![Characteristics of a Good Tax • Checkpoint: What are the four characteristics of a Characteristics of a Good Tax • Checkpoint: What are the four characteristics of a](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-13.jpg)
![Determining Fairness • Economists have proposed two different ideas about how to measure the Determining Fairness • Economists have proposed two different ideas about how to measure the](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-14.jpg)
![Determining Fairness, cont. • The ability-to-pay principle holds that people should pay taxes according Determining Fairness, cont. • The ability-to-pay principle holds that people should pay taxes according](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-15.jpg)
![Review • Now that you have learned about the features of a tax system, Review • Now that you have learned about the features of a tax system,](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-16.jpg)
- Slides: 16
![Chapter 14 Taxes and Government Spending Section 1 Chapter 14: Taxes and Government Spending Section 1](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-1.jpg)
Chapter 14: Taxes and Government Spending Section 1
![Objectives 1 Identify the sources of the governments authority to tax 2 Describe types Objectives 1. Identify the sources of the government’s authority to tax. 2. Describe types](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-2.jpg)
Objectives 1. Identify the sources of the government’s authority to tax. 2. Describe types of tax bases and tax structures. 3. List the characteristics of a good tax. 4. Identify who bears the burden of a tax. 2
![Key Terms tax a required payment to a local state or national government Key Terms • tax: a required payment to a local, state, or national government](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-3.jpg)
Key Terms • tax: a required payment to a local, state, or national government • revenue: the income received by a government from taxes and other nontax sources • progressive tax: a tax for which the percentage of income paid in taxes increases as income increases • proportional tax: a tax for which the percentage of income paid in taxes remains the same at all income levels • regressive tax: a tax for which the percentage of income paid in taxes decreases as income increases 3
![Key Terms cont tax base the income property good or service that is Key Terms, cont. • tax base: the income, property, good, or service that is](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-4.jpg)
Key Terms, cont. • tax base: the income, property, good, or service that is subject to a tax • individual income tax: a tax based on a person’s earnings • corporate income tax: a tax based on a company’s profits • property tax: a tax based on real estate and other property • sales tax: a tax based on goods or services that are sold • incidence of tax: the final burden of a tax 4
![Introduction What are the features of a tax system Fairness Simplicity Introduction • What are the features of a tax system? – Fairness – Simplicity](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-5.jpg)
Introduction • What are the features of a tax system? – Fairness – Simplicity – Efficiency – Certainty – Balance between tax revenue and tax rates 5
![Governments Authority to Tax We authorize the federal government through the Constitution and Government’s Authority to Tax • We authorize the federal government, through the Constitution and](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-6.jpg)
Government’s Authority to Tax • We authorize the federal government, through the Constitution and our elected representatives in Congress, to raise money in the form of taxes. – Taxation is the primary way that the government collects money. Taxes give the government the money it needs to operate. – The first power granted to Congress is the power to tax, which is the basis of all federal laws. 6
![Limits on the Government There also limits on the governments power to tax Limits on the Government • There also limits on the government’s power to tax.](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-7.jpg)
Limits on the Government • There also limits on the government’s power to tax. – The purpose of a tax must be “for the common defense and general welfare. ” A tax cannot bring in money that goes to individual interests. – Federal taxes must be the same in every state. – The government cannot tax exports, only imports. – Taxes must be divided among the states based on population 7
![Progressive Taxes Economists describe taxes based on their structure and according to the Progressive Taxes • Economists describe taxes based on their structure and according to the](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-8.jpg)
Progressive Taxes • Economists describe taxes based on their structure and according to the tax base. • A progressive tax is a tax for which the percentage of income paid in taxes increases as income increases.
![Other Taxes A proportional tax is a tax for which the percentage of Other Taxes • A proportional tax is a tax for which the percentage of](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-9.jpg)
Other Taxes • A proportional tax is a tax for which the percentage of income paid in taxes remains the same at all income levels. • A regressive tax is a tax for which the percentage of income paid in taxes decreases as income increases. – A sales tax is regressive because higher income households spend a lower proportion of their incomes on taxable goods and services. – Checkpoint: Is the federal income tax proportional, progressive, or regressive? 9
![Tax Bases Different taxes have different tax bases The individuals income tax Tax Bases • Different taxes have different tax bases. – The individuals income tax](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-10.jpg)
Tax Bases • Different taxes have different tax bases. – The individuals income tax is based on a person’s earnings. – The corporate income tax is based on a company’s profits. – The property tax is based on real estate and other property. – The sales tax is based on goods and services that are sold. 10
![Elasticities of Demand Tax Effects Taxes affect more than just the people who Elasticities of Demand Tax Effects • Taxes affect more than just the people who](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-11.jpg)
Elasticities of Demand Tax Effects • Taxes affect more than just the people who pay them. • Producers often pass on a portion of tax to consumers. – Generally, the more inelastic the demand, the more easily the seller can shift the tax to consumers. – Under what conditions, elastic or inelastic demand, would price of a good increase from $1. 00 to $1. 10?
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![Characteristics of a Good Tax Checkpoint What are the four characteristics of a Characteristics of a Good Tax • Checkpoint: What are the four characteristics of a](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-13.jpg)
Characteristics of a Good Tax • Checkpoint: What are the four characteristics of a good tax? – Simplicity—tax law should be easy to understand – Efficiency—the tax should be able to be collected without spending too much time or money – Certainty—it should be clear when the tax is due, how much is due, and how to pay the tax – Equity—the tax system should ensure that no one bears too much or too little of the tax 13
![Determining Fairness Economists have proposed two different ideas about how to measure the Determining Fairness • Economists have proposed two different ideas about how to measure the](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-14.jpg)
Determining Fairness • Economists have proposed two different ideas about how to measure the fairness of a tax. – The benefits-received principle holds that a person should pay taxes based on the level of benefits he or she expects to receive from the government. – The gasoline tax is an example of the benefitsreceived principle.
![Determining Fairness cont The abilitytopay principle holds that people should pay taxes according Determining Fairness, cont. • The ability-to-pay principle holds that people should pay taxes according](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-15.jpg)
Determining Fairness, cont. • The ability-to-pay principle holds that people should pay taxes according to their ability to pay. • Good taxes generate enough, but not too much, revenue. Citizens needs are met, but not to such an extensive degree that the tax discourages production. 15
![Review Now that you have learned about the features of a tax system Review • Now that you have learned about the features of a tax system,](https://slidetodoc.com/presentation_image/7c8d05975a5d6203f326d3ccf98223ee/image-16.jpg)
Review • Now that you have learned about the features of a tax system, go back and answer the Chapter Essential Question. – How can taxation meet the needs of government and the people? 16
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