Types of Taxation
*
Major
- income taxes
-> money paid
as a percentage of how much you earn in salary or wages
-> usually the
more wealth pay a higher percentage than the poor
-> usually a
certain amount of income is exempt from taxation
=> often
dependent on the number of persons in a taxpayer's family
-> a large part
of the federal tax base, some states use it too
- social security
tax
-> money paid
as a percentage of how much you earn in salary or wages
-> usually
everyone pays the same percentage, only the first $76,200 is taxed
-> theoretically
used to pay for future social security, but in practice "pay as you
go"
- capital gains tax
-> taxes paid
on investment income
=> stocks,
bonds, sale of a business, sale of investment real estate, etc.
-> pay a percentage of the profits as
tax (often 15%)
-> a large part
of the federal tax base, some states us it too
- estate taxes
-> after $2,000,000,
estate pays a percentage of inheritance in taxes
=> person
receiving doesn't pay, so an estate splitting $3 million
would
pay tax, even if 3 heirs each received $1 million
-> this tax is
in flux, and the exemption rate has been going up
-> does not exist this year (2010)
- Alternative Minimum Tax
-> a tax form
that you have to do if you don’t owe a certain minimum amount
=> forces the wealthy to basically
do taxes twice
-> designed to capture revenue from the
wealthy who have shelters and exemptions
-> NOT indexed for inflation, the amount
has gradually slid down
=> the
rate will have to be changed for this year (2010) to avoid upper middle class
- business income
tax
-> a
progressive tax like the income tax (15 up to 39%)
=> like the
income tax, many deductions and ways to appear to have no taxable income
=> dividends
are deducted, allowing owners to be taxed once
=> 66% do not pay, including 25% of
top 1,000
-> since
wealthy keep money in businesses, this is a way to get at wealth where there is
no
profit-taking
-> raises a problem of double-taxation
=> businesses
are taxed and then money made as capital gains are also taxed
-
sales tax
-> a percentage
of money spent on taxable items goes to the state, county, city, etc.
-> usually the
tax exempts food and property
-> since the
poorer people spend a higher percentage of their money taxably, they pay a
higher
percentage of this tax
- property tax
-> owners of
property pay a percentage of the value of their property annually
-> usually a
city, county, and state tax
- fees &
licenses
-> building permits, port fees, speeding
tickets, parking fees, etc.
-> teaching, marriage, automobile, etc. licenses
-> usually a
city, county, and state tax
- tariffs
-> federal
taxes on trade
-> can be used to shelter industries
from foreign competition
-> increasingly
restricted under NAFTA and the WTO
*
Taxes used in other countries
- Value Added Tax
-> a small tax
assessed (charged) at each step of the production process
-> in the end,
it is like a sales tax since it raises prices for the final consumer
=> businesses
pay taxes along the way
-> allows for a great variation in
taxation of specific goods and services
-> can be complex and regressive
- Wealth tax
-> unconstitutional
in the
-> a tax on how much money you actually hold, generally aimed at the wealthy