U'S' Taxes

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U.S. Taxes
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U.S. Taxes Federal, State and Local

• Income Taxes Taxes on earned income Pay
  Check Taxes on unearned income Interest and
  dividends
• Excise Taxes Specific Tax on products and
  services Luxury and Sin Tax
• Sales Taxes sales of retail goods and
  services
• Payroll Taxes Paid by employers and
  employees to finance specific programs -So
  cial Security (6.2 up to 106,800(2009)) -Medi
  care (1.45 no cap, part of FICA) -FICA
  (Federal Insurance Contributions Act)
• Corporate Income Tax About 35 of profits
• Property Taxes -On property -Real estate,
  boats, cars and inventories.
  

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• Delaware does not impose a state or local sales
  tax, but does impose a gross receipts tax on the
  seller of goods (tangible or otherwise) or
  provider of services in the state. Unless
  otherwise specified by statute, the term "gross
  receipts" comprises the total receipts of a
  business received from goods sold and services
  rendered in the State. There are no deductions
  for the cost of goods or property sold, labor
  costs, interest expense, discount paid, delivery
  costs, state or federal taxes, or any other
  expenses allowed.
• Business and occupational gross receipts tax
  rates range from 0.096 to 1.92, depending on
  the business activity. In instances where a
  taxpayer derives income from more than one type
  of activity, separate gross receipts tax
  reporting is required. The type of business
  activity additionally determines whether gross
  receipts tax is remitted monthly or quarterly.

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http//www.irs.gov/pub/irs-soi/07db01co.xls
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U.S. Taxes and FairnessEffective Taxes and
Voluntary Compliance

• Simplicity (People dont mind paying taxes
  if the process is easy.) 1. Individual Income
  Tax 2. Sales Tax
• Efficiency 1. Relatively low cost to
  society 2. Take in enough revenue to be
  worthwhile 3. Low economic impact -
  unless otherwise designed, a tax does not create
  a burden (changes decisions)
• Equity 1. Impartial and just 2. JUST
  WHAT IS FAIR? A. Everybody pay the same
  amount? B. Pay for what you use? C.
  Make more pay more?

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Fairness in the U.S. Tax system is based on two
basic principles.

• Benefits Received Principle Pay taxes in
  proportion to the benefit you receive.
• Ability to pay Principle a. Pay taxes
  according to ability to pay. b.
  People with higher incomes pay more taxes.
  Relatively speaking, the more the income the less
  it hurts.
• How fair are these taxes a. Gasoline excise
  tax b. Property tax c. Federal income
  tax

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Types of Taxes

• Regressive Taxes a. Tax that takes a larger
  from low-income groups than from high-income
  groups 1. User Fees 2. Excise
  Taxes 3. Sin tax b. Seem fair
  because everybody pays the same amount
• Progressive Tax a. Takes a larger of
  income from high-income groups than from
  low-income. b. Fair based on ability to pay
  principle c. Income tax and inheritance tax
• Proportional Tax (Flat Tax) a. Takes the same
  of income from all income groups. b.
  Proportional taxes have a regressive effect on
  total income 1. Sales tax 2. Rental Tax
  
  3. Social Security

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The Economic Impact of Taxes

• Affect the factors of Production ( Resource
  Allocation) 1. Raise production cost,
  shifting supply to the left and demand remains
  constant.
• Encourage/Discourage Behaviors 1. Sin tax (Cigs
  and Beer) 2. Tax deduction for homeowners and
  hybrid cars
• Taxes affect productivity and economic
  growth. Changes incentive to save, invest
  and work.
• The incidence of Tax (The Final Burden of a
  tax!!!)

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The Incidence of Tax
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