A Taxing Issue
Total Page:16
File Type:pdf, Size:1020Kb
Name: edHelper A Taxing Issue You may have noticed - whether you have bought music, candy, or clothing - that the price on the tag is not the price you pay. The item may be marked as 99 cents, but when you pay for it, the cost has risen to more than a dollar! You have been charged a sales tax. How much above one dollar you pay is determined by the location of the store where you made the purchase. Each state, county, and city or other municipal district sets its own percentage to collect for sales tax. The sales tax that is collected on each transaction is divided among the governing bodies. In other words, the state will collect part of the sales tax that you paid. The county will get a portion, and so will the city. Sales tax is just one type of tax that we are required to pay. A tax is money that a government collects from people and businesses. Tax money pays the wages of elected officials and other employees of local, state, and federal governments. It goes toward building new roads and repairing old ones. It goes toward maintaining state and national parks, programs to help the needy, public libraries, the public school system, prisons, and our military. Were you aware that every program our government creates is funded by our tax dollars? Nothing is truly free; someone pays the cost. Sometimes our government offers tax breaks - that is, a tax deduction granted in order to motivate businesses and individuals to behave in certain ways. Taxes are not a modern invention. Governments have been taxing people for thousands of years! The inscription on an ancient clay tablet found in what is now Iraq gives us a clue to the people's feelings about taxation: "You can have a lord, you can have a king, but the man to fear is a tax collector." Ancient Egyptians paid taxes on everything they owned. Can you imagine a tax collector walking into your room and counting the CDs in your music collection, your video games, the money in your wallet, and your pets - and then handing you a bill for what you owe the government for the privilege of owning those things? That's the sort of thing people had to put up with in the past. In some cultures, anyone who didn't pay his taxes could be beaten, put into prison, or sold into slavery. Today, if you don't pay your taxes or if you lie about what you owe, you could go to jail. In their zeal to extract more money from their citizens, many governments have tried to impose some rather creative but unpopular tax laws on the populace. In 1698, Russia taxed men who wore beards! The people of England suffered through a hearth tax, a window tax, and a brick tax. People were forced to pay taxes for the number of windows or hearths they had; anyone found to have filled in a hearth to avoid the tax was charged double! Buildings were taxed by the number of bricks used; when bricklayers doubled the size of the bricks to reduce the size of their taxes, the government set an increased tax on the larger bricks! In Australia, an entertainment tax was levied in the mid-20th century that increased the cost of admission to movies and other places of entertainment. Denmark tried a fireplace tax in the 17th century. Currently they have a carbon dioxide tax that applies to every kind of energy, including windmill-produced energy! Though windmills don't produce carbon dioxide, their owners are forced to pay the tax anyway. They also have a car registration tax equal to more than twice the cost of the car! The British government imposed a stamp tax on the American colonies. It was a tax on paper; all paper products had to be stamped to prove that the tax had been paid. Of course, you've heard of the Name: edHelper infamous tea tax that led to the Boston Tea Party. The taxes placed on us today are more numerous than those required in our country's youth. In those days, tariffs were charged to nations who sold goods (called imports) within our borders. American consumers paid excise taxes on "luxury" items such as tobacco, whiskey, sugar, and carriages. It wasn't until 1862 that an income tax was foisted on Americans. That tax required paying a portion of everything an individual earned. The income tax continued to come and go until 1913, when with the 16th Amendment the federal government was granted the right to impose an income tax on individuals. The federal income tax is now the greatest source of income for the U.S. government. People with more income pay a higher percentage of it in taxes; that is called a progressive income tax. Tax rates can be as high as 39.6%, depending on how much income is earned. However, in addition to the federal income tax, there is also the state income tax; it differs from state to state and is lower than the federal income tax rate. A few states do not have a state income tax at all. Taxation does not end with sales and income taxes, though. There are many other types of taxes that consumers are required to pay. All taxes fall under these main categories: federal, state, and city and/or county. Under federal taxes we find the corporate income tax, capital gains tax, social security tax, unemployment and workers' compensation tax, Medicare tax, customs tax, estate, inheritance, and gift tax. Do you feel dizzy yet? Let's move on to state taxes; depending on the specific state, we may have the state income tax, sales tax, excise tax, and property tax. A property tax requires a percentage of the value of owned real estate (think land and/or houses). That's not the end of the list yet. Moving on to city and county taxes, we find that they can also tax property as well as collect sales tax and income tax. You might wonder how it is possible for anyone to have any money left after paying all those taxes! Because taxes affect so many of us, it is a hot topic in Congress - especially around election time. Politicians often present campaign promises regarding their ideas for tax reform. In the past, Americans dumped crates of tea into Boston Harbor to protest unfair taxes. Now we use our votes. Where a candidate stands on the tax issue is just one of the elements we use to choose whom we will vote into office. Whether or not your family participates in the election process, they do participate in the taxation process. This is one issue for which it pays to be aware! A Taxing Issue Questions 1. Which of these is not paid for with tax dollars? A. a public librarian's salary B. a grocery cashier's salary C. Yosemite park ranger's salary D. a school principal's salary Name: edHelper 2. Before 1862, the funds to run our government came from ______. A. sales tax B. tariffs C. income tax D. value-added tax 3. A tax that requires a percentage of the value of owned items is called a/an: A. property or real estate tax B. excise tax C. ancient Egyptian tax D. federal income tax 4. Which of these is not a part of tax history? A. beard tax B. brick tax C. thumb tax D. stamp tax 5. Which type of tax can be required at the federal, state, and city levels? A. property tax B. income tax C. capital gains tax D. sales tax 6. An individual who avoids paying his taxes today may: A. have to pay double B. be beaten by government officials C. lose his freedom for an extended amount of time D. be sold into slavery 7. If taxpayers don't like high taxes, they can: A. move to the Caribbean B. vote for candidates who promise lower taxes C. start a revolution D. refuse to pay them (3 + 5) + 6 = 724 + 499 = Sarah rolls a die. What is the Nathan has four dimes, three nickels, and chance of her rolling a 6? one quarter. He also has one other coin that is different from the rest of his coins. How much could he have? edHelper Name: How many of these can you write about? Think! Write! Check all the ones you answered. Thomas Jefferson, America's third president, once said, "A government that is large enough to supply everything you need is large enough to take everything you have." Put that thought into your own words and explain with examples why you agree or disagree with that statement. In his remarks to the Detroit Chamber of Commerce in 1956, John S. Coleman said, "The point to remember is that what the government gives it must first take away." What do you think he meant by that statement, and what do you believe his point was as he spoke? Two men born in the mid-1800s had differing view of taxes. Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice (1841 - 1935) was quoted as saying, "I like to pay taxes. With them I buy civilization." On the other side of the issue was Mark Twain, an American author (1835 - 1910) who said, "I shall never use profanity except in discussing house rent and taxes." Use your imagination to write a story of these two men debating the tax issue.