Tax BasesAnderson: Structure of Taxes

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Introduction

• What is taxed—also known as the tax base.

• The tax base for income, sales, VAT and other taxes.

• Concepts and issues of tax rates.

Size of the US government is relatively small

Most spending occurs at the federal level

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Federal State\Local

Fiscal trends in the US are remarkably stable

Effect of Great Recession on Debt and Deficit

State/local revenue and spending are trending upward

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Taxation in the Circular Flow of Income and Product

payroll tax A tax levied on income earned on one’s job.

Taxes on Earnings

Taxes on Individual Income

individual income tax A tax paid on individual income accrued during the year.

capital gains Earnings from selling capital assets, such as stocks, paintings, and houses.

Types of Taxation

Taxes on Corporate Income

corporate income tax Tax levied on the earnings of corporations.

Taxes on Wealth

wealth taxes Taxes paid on the value of the assets, such as real estate or stocks, held by a person or family.

property taxes A form of wealth tax based on the value of real estate, including the value of the land and any structures built on the land.

estate taxes A form of wealth tax based on the value of the estate left behind when one dies.

Types of Taxation

Taxes on Consumption

consumption tax A tax paid on individual or household consumption of goods (and sometimes services).

sales taxes Taxes paid by consumers to vendors at the point of sale.

excise tax A tax paid on the sales of particular goods, for example, cigarettes or gasoline.

Types of Taxation

Ad Valorem and Unit Tax Examples

Sources of US Tax Revenue

Taxation Around the World