Taxes: Where Does Your Money Go?
This lesson looks at taxes from both the big picture and the individual perspective. Students learn about why the government taxes, where the money goes, and how different income brackets pay different taxes. They also learn about their individual responsibility to pay taxes, and that their gross salary does not always reflect what they will actually take home. Finally, the class will examine ways to lower taxes through deductions, retirement accounts, etc.
Three 45-minute class periods
- Government revenue and expenditures
- Net vs. gross income
- Income brackets
- Deductions - Pre-tax
Students will be able to:
- Analyze a pay stub
- Identify pre- and after-tax deductions
- Understand why people pay taxes
- Compare tax differences given 401(k) deductions
- Do a cost-benefit analysis of a 401(k) plan
- Critique public vs. private responsibility
McREL Economics Level 4, Standard 5, Benchmark 5
Understands that governments often redistribute income directly when individuals or interest groups are not satisfied with the income distribution resulting from markets, and that governments may also redistribute income indirectly as side-effects of other government actions that affect prices or output levels for various goods and services.
McREL Economics Level 4, Standard 6, Benchmark 2
Understands that most federal tax revenue comes from personal income and payroll taxes, and these taxes are used to fund social security payments, the costs of national defense, medical expenditures, and interest payments on the national debt.
McREL Thinking and Reasoning Level 4, Standard 1,
http://www.mcrel.org/compendium/search.asp?Action=Search&SubjectName =21&GradeOption=ALL&Keyword=&KeywordOption=AND&Vocabulary=&VocabularyOption =AND&Topic=&TopicOption
Evaluates an argument objectively by considering all sides of an issue (e.g., using past experience, data, logical analysis.
This lesson was prepared by: Melissa Donohue