A World Without Taxes — Tax Basics
From Facilitator's Guide for
Teaching "Taxes: Where Does the Money Go? Federal, State and Local
Government"
by Scott Loveridge, Liz Templin, Carole Yoho,
and Nancy Lenhart.
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A.
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Activity — Read
A World Without Taxes
of the Taxes publication. Ask people how they would spend the extra money if they didn't have to pay taxes. Hopefully, someone will say a new house and a new car. If not, say these yourself. Draw examples from audience responses.
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C.
Answers to Warm-Up Question #9:
Income is easy to hide from local governments.
Someone may work in one city and live in another. It is not administratively convenient to tax income vs. property that cannot move or be hidden. Property tax revenues are also more stable than income taxes.
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Answers to Warm-Up Question #10:
A flat fee would not be fair
to poor people. It would not meet the tax fairness criterion, which is ability to pay.
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D.
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Summary
Our tax dollars go to pay for government services. While we may argue about the level of services to be provided, it is clear that we need government to provide some services.
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Back to Table of Contents
To explain what government services we receive, we will use charts to show where government spends its money.
B.
Answer to Question #1:
False.
As shown in Table 1, the federal government spent the largest share of its budget on Social Security/Medicare in 1990-91.
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C.
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Review the overhead for
Figure 1. Percentage of State and Local Government General Expenditure by Function
to overview total spending for state and local government dollars.
Main points:
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The size and functions of local, state, and federal governments have a lot to do with what services they provide and what type of taxes they collect.
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Each level of government tends to focus on different services, and local services are usually the most visible.
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D.
Answer to Question #2:
False.
As shown in Figure 1, the real answer is the largest expenditure for state and local governments is education. Education spending is double that of welfare (income maintenance) spending in Minnesota.
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Main point:
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Education is the largest combined expenditure at the state and local levels.
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F.
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U.S. Tax Bill Compared with Other Countries,
Table 2
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Main point:
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Our national tax bill (as a percentage of national income) is smaller than those of the other wealthy nations of the world, while our Minnesota state and local tax bill takes a higher proportion of our personal income than is taken by the state and local tax bills of many other states. As you compare our national tax bill to other governments, also think about the services that they provide similar to or different than our government.
Produced by Communication and Educational Technology Services, University of
Minnesota Extension.
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