Economics Principles and Practices © 2012 Georgia

"Understanding Individual Income Taxes"

Introduction
As you have already learned, the individual income tax is a tax on people's earnings. The tax laws should be written so that both the taxpayer and the tax collector can understand them. This task is not always easy, but people seem more willing to accept the necessity for taxes when they understand them. The purpose of this activity is to examine the taxes that are taken from your income.

Destination Title: Internal Revenue Service

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Directions
Read the article What is Taxed and Why. Print a copy of the page or read the information and answer the following questions. Answer the questions below.

• Scroll down to the bottom of the page and select information for one of the jobs listed.
• Print a copy of the page or read the information on screen and answer the following questions.

1			Who benefits from withholding taxes? How?
2			What is tax liability?
3			What is the difference between vertical and horizontal equity?
4			What is a tax deduction? Give examples.
5			Create a list of tax deductions and tax credits that your family may use on your next tax form.