1. What is fair?

2.  How much money is deducted from your
paycheck for Social Security & Medicare tax?
 7.45%
 How much is deducted from someone who
makes $80,000?
 7.45%
 This is PROPORTIONAL.
 Is it fair?

3.  How much money is deducted from someone
who makes $200,000 for Social Security &
Medicare tax?
 7.45% of the first $90,000, 0% after that
 Is it fair?
 One argument is yes, because social security
benefits don’t go up for that person, so why
should they pay more.
 Do you think this argument is from the
Republicans or Democrats?

4.  Social Security over $90,000 is a REGRESSIVE
tax, because the poor pay at a higher
percentage than the wealthy.
 Gasoline tax is another example:
◦ One person earns $5,000 a year and buys $50 gas
per week
◦ Another person earns $50,000 a year and buys $50
of gas per week
 They pay the same AMOUNT of tax, but the
person who earns $5,000 pays a higher rate.

5.  What other regressive taxes can you name?

6.  How much income tax does someone who earns
$5,000 pay?
 $0
 $10,000?
 About $500
 $25,000?
 About $2800
 $200,000?
 About $75,000
 This is called PROGRESSIVE – higher incomes pay
higher rates.
 Is this fair?

7.  What progressive taxes can you name?

8.  Luxury tax (yachts, fur coats, jewelry)
 Cigarette tax
 Alcohol tax
 (Sin taxes)
 Excise tax (on cars)
 Sales tax on food & clothing
 Inheritance tax
 Lottery – a voluntary tax

12.  If you had to raise one tax, what would it be?
 If you could lower one tax, what would it be?