Social Studies - 2019-20

GOVT.15c - Types and Purposes of Taxation

The student will apply social science skills to understand the role of government in the Virginia and United States economies by 

c) investigating and describing the types and purposes of taxation that are used by local, state, and federal governments to pay for services provided by the government; 

Adopted: 2015

BIG IDEAS

UNDERSTANDING THE STANDARD

The governments of Virginia and the United States finance their operations through the taxes that are collected from individuals and corporations. 

Different tax structures affect taxpayers differently and can be distinguished by whether the tax burden falls more heavily on those with higher or lower income levels. 

ESSENTIALS

Taxes and/or fees pay for the production of government-provided goods and services. 

The power to tax is the first among the expressed powers of Congress. 

Taxation is used to raise revenue; it is also used to regulate or discourage some activities. 

Tax policies can also be used to encourage certain activities. 

Income taxes paid by individuals and corporations are the largest single source of revenue today. 

Types of taxes 

 Individual income tax 

 Corporate income tax 

 Payroll taxes 

 Customs duties 

 Sales tax 

 Real estate and personal property taxes 

A progressive tax takes a larger percentage of taxes from people in higher-income groups than from people in lower-income ones; the United States federal income tax is an example. 

A proportional tax, also called a flat tax, is one in which the same tax rate is paid by people at all income levels. 

People who earn more pay more, but they pay the same percentage rate. 

Property tax is an example of a proportional tax. 

A regressive tax applies in the same way to everyone, but the tax paid represents a larger share from lower-income groups than from higher-income groups. 

Sales tax is a regressive tax.

KEY VOCABULARY

Updated: May 17, 2017