Taxes Basics - Vocabulary/Comprehension Assignment
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by Megan Heine
| 15 Questions
Students will be able to
  • Explain where income taxes are collected from and how they provide revenue for public expenses
  • Identify how different types of commerce are taxed on a daily basis
  • Describe how the progressive tax code and different taxes between states lead to individuals paying varying amounts of taxes
Essential Questions
  1. What are the important events in the tax year?
  2. Where does tax money come from?
  3. What does the government spend our taxes on?
1
1 pt
In 2014, the U.S. government spent $3.5 Trillion. But on what?
Below are five of the things the U.S. spent money on.
  • Healthcare
  • The Military
  • Education
  • Benefits for Retired People
  • Science Research

2
1 pt
Estimate the percentage they spent on each.
**NOTE: Your estimates do not need to add up to 100%. The government spent money on other things besides these five categories.
Everyone pays taxes, and many people complain about them. But why?
Watch this video to learn where tax revenue comes from and what exactly the government is spending that money on. Then answer the following questions.
  1. Why does the government need taxes?
  2. What is one example of “mandatory” spending? An example of “discretionary” spending?
  3. What is one benefit that you or someone you know receives as a result of government spending?
The outlined content above was added from outside of Formative.
Federal Tax Revenue and Spending - The Basics
The U.S. government collects trillions of dollars in taxes every year. But where does that money come from? And where does it go?
Review the slides and answer the following questions:
  1. Who are the two main groups that are paying taxes?
  2. Compare the actual spending figures to your estimates in the Discussion Prompts. How similar were your estimates to the actual figures?
  3. Are there any areas of spending that surprise you? That you disagree with? Explain your answer.
3
1 pt
Who are the two main groups that are paying taxes?
4
1 pt
Compare the actual spending figures to your estimates in the Discussion Prompts. How similar were your estimates to the actual figures?
5
1 pt
Are there any areas of spending that surprise you? That you disagree with? Explain your answer.
8 "Hidden" Taxes You're Paying Every Day
While individuals must file income taxes once a year, we pay taxes every day… often without even knowing it. Read this article about everyday purchases and the associated taxes.
Answer the following questions.
  1. Which taxes listed do you pay?
  2. Did any of the hidden taxes surprise you? Why or why not?
  3. Do you think it’s fair to tax specific items or activities (like gas, or travel)? Why or why not?
Hidden taxes: Eight you are paying every day
https://www.aol.com/2008/03/11/hidden-taxes-eight-you-are-paying-every-day/
Ken and Daria Dolan are widely known as America's First Family of Personal Finance.
This time of year, we are all well aware of how much we pay Uncle Sam in income taxes. And we all can clearly see the sales tax we pay when we go shopping or enjoy a nice dinner out. We're not happy about them. But at least we know that we're paying those taxes.
But most of us have no idea just how many hidden taxes we pay everyday that take a serious bite out of our wallets. We pay little known-taxes on everything from travel to peanut butter (Ken's favorite), to life insurance to liquor. Often, we don't know, specifically, what federal tax we are paying on goods and services because that tax (such as excise tax on imports or 'sin' taxes on liquor), is built right into the price, and doesn't appear anywhere on the sales slip as a tax.
And boy, does it add up! We consumers pay hundreds of billions of dollars in "hidden" taxes each year. It's estimated that our federal income tax represents less than half of the taxes we pay each year. So let's expose eight hidden taxes you probably didn't even know you were paying…
1. Gasoline tax. Next time you fork over big bucks at the gas pump, remember that you are paying nearly 46 cents per gallon in federal, state and local taxes. That's nearly 15% of the cost of a gallon of gas!
2. Gas guzzler tax. If you are driving an SUV or other large vehicle, you have a tax double whammy. Not only are you paying that big gasoline tax, but you also got socked with a special tax dealers are charged – and pass right along to you on the sticker price – for gas guzzlers. This tax can be as much as $7,700!
3.Hidden taxes on travel. Airfare, hotels, your rental car -- you are paying a hefty tax on each one of them. You pay a 7.5% tax on a domestic ticket and a $3 tax for each segment of a flight. Hotel and rental car taxes vary by state, but can be as much as 40% of your overall cost. Ouch!
4."Sin" tax on beer, liquor, gambling and cigarettes. The federal tax on a pack of cigarettes is 39 cents, but there are many state and local taxes that increase the price. Tobacco taxes contribute more than $7 billion to the Treasury every year. Almost half of the cost of beer and liquor comes from excise taxes.
5. Catching a fish or two isn't free. A fishing enthusiast pays 10% of the sales price on sport-fishing equipment in taxes. That's enough to make you switch to another sport. Maybe archery? But wait, an archer pays 40 cents tax per arrow. And quivers are taxed at 11%! If you buy a shotgun or other firearm, you'll pay 11% of the sales price in federal tax on the gun as well as any ammunition. Handguns are taxed at 10% of the sales price.
6. State taxes on insurance premiums. This little doozy brings in $9 BILLION in revenue a year! States charge insurance companies a tax on the insurance premiums they receive from customers in that state. And who do you think the insurance companies pass that cost along to? You got it. You and me.
7. Excise tax on imports. The sneakiest of all the hidden taxes that we pay is in the form of excise taxes on many of the products we import. The tax makes the prices of imported products artificially high to make it easier for domestic products to compete.
Here are just a few of the items and the percentage that their prices are jacked up by import taxes:
  • Bicycles 11%
  • Brussel sprouts 12%
  • Cotton hammocks 15%
  • Infant formulas 18%
  • Flashlights 18%
  • Peanut butter 143%
  • Girdles and panty girdles 24%
  • Brooms 32%
  • Plastic school supplies 5%
8. Payroll taxes. Forget about your income tax withholding. When is the last time you looked – really looked – at all the other taxes coming out of each and every one of your paychecks? You've got your Social Security tax, your Medicare tax, your unemployment tax, your workers compensation... It all adds up to a serious percentage of your money going into someone else's pockets.
That's eight hidden taxes and there are 80 more where those came from! The bottom line is all these hidden taxes are nickel and diming us to death. And with so many Americans already struggling, every dollar counts.

Ken and Daria offer more tax tips – including 10 Tax Changes You Need to Know Now – through their web site and free newsletter at Dolans.com.
6
1 pt
Which taxes listed do you pay?
7
1 pt
Did any of the hidden taxes surprise you? Why or why not?
8
1 pt
Do you think it’s fair to tax specific items or activities (like gas, or travel)? Why or why not?
Federal Individual Income Tax Rates
Similar to which state you live in, individuals pay different taxes depending on how much they earn.
Read the article and answer the following questions.
  1. What does it mean that the U.S. has a “progressive” tax system?
  2. If your income is $46,000 and you are single, what is your marginal tax rate?
  3. Why do you think you get a different tax rate if you are single versus married?
  4. What is your “effective” tax rate if your income is $46,000 and you’re single?

What Are the Federal Income Tax Rates by Tax Year?

What is a Tax Rate?
A tax rate is the percentage at which taxes are paid on a dollar of income.
What is a Tax Bracket?
A tax bracket is a range of income amounts that are taxed at a particular rate. Each ling status has its own tax brackets, but the tax rates are the same for all ling statuses. Most of us pay income taxes across several tax brackets, which is what makes our tax system "progressive". When someone asks what tax bracket you fall into, they generally want to know your "marginal tax rate". This is the tax bracket that your last dollar of income falls into, and therefore the highest tax rate you pay.
How is my income taxed?
If your marginal tax rate is, for example, 25%, that doesn't mean that ALL of your income is taxed at 25%. Income is actually taxed at different rates. Here's how it works:
Your 2017 income is $40,000 and your filing status is Single. Your first $9,325 will be taxed at 10%. Every dollar from $9,326 to $37,950 will be taxed at 15%. Every dollar from $37,951 to $40,000 will be taxed at 25%.
If you added the taxes that you pay on each portion of your income, and then divide it by your total income (then multiply by 100), you would get your "effective tax rate". This is the actual rate you pay on your taxes, regardless of your marginal tax rate.
Where do I find my Federal Income Tax Rate?
See the tax rate schedules listed below by Tax Year. Find your tax return filing status and compare you income to the amounts listed to find your marginal tax rate.
9
1 pt
What does it mean that the U.S. has a “progressive” tax system?
10
1 pt
If your income in 2017 was $46,000 and you were single, what was your marginal tax rate?
11
1 pt
Why do you think you get a different tax rate if you are single versus married?
12
1 pt
What is your “effective” tax rate if your income is $46,000 and you’re single (2017)?
EXIT TICKET QUESTIONS
13
1 pt
Which day is considered an important deadline in the tax calendar and why?
14
1 pt
What are two factors that might affect how much tax you end up paying?
15
1 pt
What does the government spend tax money on? List as many items as you can.
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