TAXES are payments that people must make to governments to provide goods and services such as education, roads, police protection, parks, and national defense.
The most common taxes are on income, sales, and property. Many businesses also pay taxes on their profits and property.
People are concerned about taxes – how much they pay, and how taxes are spent and collected. There is often much disagreement about that!
Taxes are required payments that people and businesses pay to support all levels of government services – national, state, and local. Governments provide many of these services because they would not be provided in sufficient quantities if left to private enterprise alone.
People pay many kinds of taxes. The most common are taxes on income, consumer purchases (sales), and property. Many businesses also pay taxes on their profits.
Below is a graph of federal government tax receipts and expenditures. The same data is provided for state and local governments. The role of government in the economy has increase significantly in the United States. In 1929, government expenditures accounted for about 10 percent of our national output (GDP). Today that figure is about 33 percent.
Individual Income Taxes 47% Social Security 21%
Social Insurance Taxes 35% National Defense 22%
Corporate Income Taxes 12% Income Security 14%
Other 6% Net Interest 7%
Medicare 13%
Health 10%
Other 13%
Source: Economic Report of the President – 2009
State/Local Tax Receipts and Expenditures
2007 Tax Receipts 2007 Expenditures Sales Taxes 19.0% Education 34%
Property Taxes 16.5% Highways 6%
Individual Income Taxes 12.0% Public Welfare 18%
From Federal Government 21.0% Other 42%
Corporate Income Taxes 2.5%
Other 29.0%
Grades 3-6 teachers: Do the Taxes lesson in the very practical Pint-Size Economics curriculum.
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Create a bulletin board entitled: “How Are Our Federal Taxes Used?” Using the data above, have students research examples for each expenditure category, such as food stamps under “income security” or disability payments under “social security.” Do the same for the other pie graphs.
Have students research all the different kinds of taxes they pay. They will be amazed at how many there are. (income; sales; property; tolls; excise taxes on car and fishing licenses, phone service, and gasoline; death tax, gift tax, inheritance tax, etc.). Challenge students to figure out how much in taxes they pay each week.
Have students create pie graphs and/or bar graphs using the Federal and State/Local government data above.
Check out the Tic Tac Taxes lesson on EconEd Link The lesson is found in the lessons for grades 3-5.
Have students debate then write a short essay on either or both of these very relevant statements about tax policy.
- “People who don’t pay taxes should not receive government services.”
- “Everyone should help pay for services, even if
they don’t use the services themselves.”
LITERATURE
CONNECTION
Wolfspell, by Anna Ciddor, 192 pages
Oddo and Thora are determined to stop the corrupt Sheriff, who has imposed harsh taxes on the village, and seek help from the Gula Thing. They must fight their way through raging rivers, treacherous swamps, and wild wolves to stop Sheriff from seizing their homes.
The Young Zillionaire's Guide to Taxation and Government Spending, by Marie Bussing-Burks, 48 pages
The author explains what the government spends money on, where it gets money to spend, and possible ways to reduce the national debt.
