Title: 30.2 Taxation – Principles of Economics
Headings: 
30.2 Taxation
Learning Objectives
Federal Taxes
How does the marginal rate work?
State and Local Taxes
Key Concepts and Summary
Self-Check Questions
Critical Thinking Questions
References
Glossary
Solutions
Answers to Self-Check Questions

Content: A regressive tax is one, like the payroll tax (above a certain threshold) that supports Social Security, where those with high income pay a lower share of income in taxes than those with lower incomes. Self-Check Questions
Suppose that gifts were taxed at a rate of 10% for amounts up to $100,000 and 20% for anything over that amount. Would this tax be regressive or progressive? If an individual owns a corporation for which he is the only employee, which different types of federal tax will he have to pay? What taxes would an individual pay if he were self-employed and the business is not incorporated? The social security tax is 6.2% on employees’ income earned below $113,000. Is this tax progressive, regressive or proportional? Critical Thinking Questions
Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, why might this be so? What is the benefit of having state and local taxes on income instead of collecting all such taxes at the federal level?