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Introduction and Chapter 1 Types of Taxes and the Jurisdictions that Use Them
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Introduction to Students
Slide 1-2
Taxes as Business Costs - Maximize after-tax values - why is this different from tax minimization? Taxes as Household Expenditures - tax bite is 3 / 8 hours. Objectives: tax policy: helps understand law, become better informed voter link finance and taxation - NPV of after-tax cash flows - tax deferral framework of taxation is stable
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Taxing America
Slide 1-3
Basic Terminology Tax Base, Rate, and Revenue Relationship Classifying and Describing taxes Tax Policy Sources of Law
McGraw-Hill/Irwin
Taxing America
Slide 1-4
Taxpayer = Incidence refers to the ultimate economic burden of the tax. Not always the person who pays the tax. see Q4, Q6. Jurisdiction = See IR5, 9
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Taxing America
Slide 1-5
Tax Base X Tax Rate = Tax Revenue Tax Base: Tax Rate: Tax Revenue:
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Taxing America
Slide 1-7
Taxes Imposed by Jurisdiction Local Property, Earnings, and Sales Taxes State Sales and Income Taxes Federal Income Taxes Employment Taxes Excise Taxes Transfer Taxes
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Taxing America
Slide 1-8
Earnings Taxes
Sometimes imposed on individuals who work in one city but live elsewhere. Many big cities impose.
Sales Tax
Usually piggy-backed with state sales tax and remitted to local authority.
McGraw-Hill/Irwin
Taxing America
Slide 1-9
State Taxes Sales and Use Tax How is the use tax related to the sales tax?
Taxing America
Slide 1-10
Taxing America
Slide 1-11
Federal Taxes Income Tax In your own notes, briefly describe the history of the US income tax.
McGraw-Hill/Irwin
Taxing America
Slide 1-12
McGraw-Hill/Irwin
Taxing America
Slide 1-13
Transfer Taxes
Based on the value of an individuals _________ transferred by ________ or ____________. These taxes represent a form of wealth redistribution. What effect do you think an estate tax has on savings? The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
Foreign Taxes
Slide 1-14
Income taxes like the U.S. Value-added taxes (the U.S. does NOT have this).
Value-added taxes are like sales taxes, but they are assessed incrementally on value added throughout production process. VAT is self-enforcing because taxpayer can claim a credit for VAT paid to supplier with proof of payment.
Foreign governments compete for tax dollars and foreign investment through rates and tax preferences.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
New tax bases: Urban tax bases decline - what are alternatives? Gambling - where is the incidence of taxation? Sales and use tax - What did the Supreme Court case Quill Corporation vs. North Dakota hold? What are the implications for internet commerce?
McGraw-Hill/Irwin
McGraw-Hill/Irwin
Assume you are the fair-minded tax manager of LilLand. Queen Lil demands that you collect $36,000 from the following four taxpayers:
A earns $100,000 B earns $50,000 C earns $25,000 D earns $10,000.
Write on a piece of paper how much you will collect from each taxpayer. The sum must be $36,000. Turn this in on your way out, and well discuss next time.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002