todd flanders: daddy, what do taxes pay for? ned flanders: oh, why, everything! policemen, trees,...

• Todd Flanders: Daddy, what do taxes pay

for?• Ned Flanders: Oh, why, everything!

Policemen, trees, sunshine! And lets not forget the folks who just don't feel like working, God bless 'em!

Okay, Marge, if anyone asks: You require 24-hour nursing care, Lisa's a clergyman, Maggie is seven people, and Bart was wounded in Vietnam.

Tithe barn

Government's view of the economy could be

summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.

The art of taxation consists in so plucking the

goose as to obtain the largest possible number of feathers with the smallest possible amount of hissing.

http://www.youtube.com/watch?v=L2qMFpbiw

mw

What taxes pay for.

Regressive taxation: takes a larger proportion of poor people’s income.

Proportional taxation: the tax collected rises proportionally to income.

Progressive taxation: the tax collected rises more than proportionally to income, in other words the burden falls disproportionately on richer people.

Types of taxation.

Indirect tax: a tax on spending.

Direct tax – a tax levied directly on the income

or profit made by firms and individuals.

Can you think of a…..

A progressive, direct tax

A regressive, indirect tax

A proportional, direct tax

A progressive, indirect tax.

A regressive, direct tax.

A proportional, indirect tax.

Marginal Tax rate: tax on additional

income.

http://www.deloitte.ie/tc/Results.aspx

Tax bands or tax thresholds or tax brackets.

http://www.hmrc.gov.uk/rates/it.htm income

tax allowances.

Tax rate 2012 to 2013

tax year2013 to 2014 tax year

2014 to 2015 tax year

Basic rate 20% £0 to £34,370 £0 to £32,010 £0 to £31,865

Higher rate 40%

£34,371 to £150,000

£32,011 to £150,000

£31,866 to £150,000

Additional rate 45% (50% for 2012 to 2013)

Over £150,000 Over £150,000 Over £150,000

Increasing the tax bands is effectively the

same as a tax ______, or _________ ________ __________.

http://www.bbc.com/news/magazine-26327114

Increase taxes or cut spending?

Increasing taxes could backfire – Laffer curve.

Increasing taxes results in more uncertainty.

Increasing taxes affects incentives. Increasing indirect taxes has an impact on the

CPI. Increasing indirect tax can incentivise smuggling. Increasing indirect taxes on price elastic goods

actually results in less revenue. High wages in the public sector draw talent from

the private sector – this inhibits growth. So taxes should not be increased – public sector wages should be cut instead.

The poorest are most dependent on

government assistance – they will be most severely affected.

Cutting expenditure

Who the allowance is for Rate (weekly)

Eldest or only child £20.30

Additional children £13.40 (per child)

For additional children, the welfare falls due to

___________ of __________.

Cutting training and education for the

unemployed can create long term unemployment – the social costs of that are far greater than the current cost of providing the education.

Governments provide merit goods – cutting

government expenditure means (in all likelihood) that these will not be provided in the same quantity or quality.

Wages in the public sector should be

reasonably generous – public servants such as policemen, firemen, teachers, doctors and nurses provide an invaluable service the their country.

Cutting wages and benefits for public sector

workers causes industrial action and strikes