Tax Charts for Systems Thinking MAOM

Tax Charts for Systems Thinking MAOM

• 1.
  Three Families an introduction to taxes by Just Economics
• 2.
  Tax Policy Does3 Things 1. Redistributes wealth up or down the income scale. 2. Influences private economic decisions by creating incentives. 3. Raises money to be invested by the public.
• 3.
  Family Regressive Flat Progressive Income $15,000 $3,000 (20%) income left $12,000 $60,000 $3,000 (5%) income left $57,000 $500,000 $3,000 (.6%) income left $497,000
• 4.
  Family Regressive Flat Progressive Income $15,000 $2,250 (15%) income left $12,750 $60,000 $9,000 (15%) income left $51,000 $500,000 $75,000 (15%) income left $425,000
• 5.
  $440,000 x 35% Progressive Tax Layer Cake 32% $154,000 of$500,00 + $6,750 0 $160,750 $60,000-$500,000 +$0 +$6,750 35% $45,000 11% x 15% of 15% $15,000-$60,000 +$0 $60,000 $6,750 % $0-$15,000 0%
• 6.
  Family Regressive Flat Progressive Income $15,000 $0 (0%) income left $15,000 $60,000 $6,750 (11%) income left $53,250 $500,000 $160,750 (32%) income left $339,250
• 7.
  Family Regressive Flat Progressive Income $15,000 $3,000 (20%) $2,250 (15%) $0 (0%) income left $12,000 $12,750 $15,000 $60,000 $3,000 (5%) $9,000 (15%) $6,750 (11%) income left $57,000 $51,000 $53,250 $500,000 $3,000 (.6%) $75,000 (15%) $160,750 (32%) income left $497,000 $425,000 $339,250
• 8.
  Family Regressive Flat Progressive Income low-income same $ amount same tax rate lowest tax rate middle- same $ amount same tax rate middle tax rate income high-income same $ amount same tax rate highest tax rate
• 9.
  How Do TaxCredits Work? income = $20,000 tax rate = 20% $20,000 income X 20% tax rate $ 4,000 income tax minus $ 1,000 tax credit PAY $ 3,000 income tax
• 10.
  How Do TaxDeductions Work? income = $20,000 tax rate = 20% $20,000 income minus $ 1,000 tax deduction 19,000 taxable income X 20% tax rate PAY $ 3,800 income tax