A5.2 Sharing With Uncle Sam Assignment
Directions: Write the career name and yearly income from your Life After High School Assignment. Then, use that information to complete the charts below.
Career Name: Sales Manager Yearly Income: $137,650
Proportional/ Flat Tax
Some Americans are supporting switching to a flat income tax rate of 15%. How much would you pay under this plan?
(Your Income) X 15% (or .15) = $137,650 x 15% = $20,647.50
Calculator Tip: To multiply by a percentage, you can use your calculator in two ways. You can use the percent symbol key or you can enter the percentage as a decimal. To change a percentage to a decimal, move the decimal point two digit places to the left. Example: 20% becomes 0.20
Regressive Tax
In the first column, mark an X next to the row that matches your yearly income. Then, calculate your tax and enter the amount in the last column.
Mark “X” next to the row that matches your yearly income. / Proposed Regressive Plan / Calculate your tax. For example, $10,000x40%=$4,000 in tax.40% on income up to $25,000 / $25,000 X 40% = $10,000
30% on income between $25,000 and $34,000 / $9,000 X 30%= $2,700
25% on income between $34,000 and $44,000 / $10,000 X 25% = $2,500
20% on income between $44,000 and $80,000 / $36,000 X 20%= $7,200
X / 10% on taxable income over $80,000 / $57,650 X 10% = $5,765
TOTAL / $28,165
$34,000- $25,000 = $9,000
$44,000 - $34,000 = $10,000
$80,000 - $44,000 = $36,000
$137,650 - $80,000 = $57,650
Progressive Tax
In the first column, mark an X next to the row that matches your yearly income. Then, calculate your tax and enter the amount in the last column.
Mark “X” next to the row that matches your yearly income. / Proposed Regressive Plan / Calculate your tax. For example, $10,000x10%=$1,000 in tax.10% on income up to $25,000 / $25,000 X 10% = $2,500
20% on income between $25,000 and $34,000 / $9,000 X 20% = $1,800
25% on income between $34,000 and $44,000 / $10,000 X 25% = $2,500
30% on income between $44,000 and $80,000 / $36,000 X 30% = $10,800
X / 40% on taxable income over $80,000 / $57,650 X 40 % = $23,060
TOTAL / $40,660
$34,000 - $25,000 = $9,000
Property Taxes
Property taxes are paid by homeowners to local governments. These taxes are a major source of funding for public schools. Increases or decreases in these tax rates help determine funding for local schools. Additionally, changes in these tax rates can greatly impact an individual's mortgage payment.
Imagine you are contemplating purchasing a home in one of two counties. The first home is in County A, it boasts the best public schools in the state and your Realtor assures you that your home will increase in value over the years. However, just across the county line in County B is a similar home that is 10% less expensive with lower property taxes. You have heard that the local schools have a difficult time with funding and are lower performing than nearby County A. Which home would you choose? Cite the costs and benefits for yourself (and any potential children) of your decision. Also consider the impact of property taxes on the community.
Property A / Property B-Higher performing schools
-Increasing home value
-Higher property taxes than B
-Costs 10% more than B / -Lower performing schools
-Uncertain home value
-Lower property taxes than A
-Costs 10% less than A
Benefits of choosing A: better education, and home value increases. / Benefits of choosing B: Lower taxes
Costs of choosing A: more expensive to live, higher taxes. / Costs of choosing B: Lower level of education and uncertain home value.
Reflection Questions
- Is federal income tax a direct or indirect tax? Explain your response. The federal income tax is a direct tax. It is a direct tax because it is paid straight to the government.
- What are the main differences between the flat, regressive, and progressive tax plans? A flat tax is a system where everyone pays the same amount of tax rate, no matter what their income is. Regressive tax the lower income you have, you pay higher tax and the higher income that you earn you pay lower taxes. However, for progressive tax if you have higher income, you pay higher taxes and the opposite.
- Under which plan would you pay the most in taxes? Under the progressive tax plan, I would pay the most in taxes.
- Under which plan would you pay the least in taxes?Under the regressive tax plan, I would pay the least in taxes.
- Which tax system would benefit you the most? Explain your response and refer to your specific career. I believe that the regressive tax plan would benefit me the most, because I would be paying less taxes, than maybe people who earn lower income than me. I believe that by paying less taxes I would be able to save more money.
- Do you think the plan that benefits you most is the most fair for everyone? Explain your response. I don’t believe that the plan that benefits me the most is the fairest for everyone. The reason why I don’t believe it is because I have chosen the Regressive tax plan. Regressive tax plan, is not based on how much you earn, it is the same tax rate for everyone. I believe for someone who is earning less money than me would be more difficult for them.
- Imagine you marry and your spouse earns $50,000 per year. You will be filing your taxes together.Does this change your opinion of the proposed tax plans? Explain your response. I believe that my opinion would not change of the proposed tax plans, because we would be filling it together and we would combine our income. Our income could only increase, and the regressive tax plan would still be our best choice.