Chapter 9: Sources of Government Revenue "Understanding Individual Income Taxes"

Introduction
Students have learned that 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. Students will role-play sample part-time jobs and the amount of individual income taxes paid.

Lesson Description
Students will use information from the Internal Revenue Service Tax Interactive Web site to find out more about individual income taxes.

Previous Knowledge Expected
Students should be familiar with the following terms:
tax return: annual report filed with local, state, or federal government detailing the income earned and taxes owed
individual income tax: tax levied on the wages, salaries, and other income of individuals

Applied Content Standards (from the National Council on Economic Education)
Standard 13: Income for most people is determined by the market value of the productive resources they sell. What workers earn depends, primarily, on the market value of what they produce and how productive they are.
Standard 16: There is an economic role for government to play in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies redistribute income.

Instructional Objectives
1. Students will identify types and amounts of taxes that are deducted from an individual's paycheck.
2. Students will define the purpose of the Form W-4.
3. Students will select and restate a tax term.
4. Students will list goods and services paid for by tax dollars.

Student Web Activity Answers
1-4: Teacher may prepare an answer sheet from the Web site.

Extending the Lesson
Encourage students to select the "What Is Fair" section of the Web site. Have students solve the Case of the Fair Tax.
Have students read the information provided on the Web site regarding electronic tax filing. Download sample forms and have students complete them.

Student Web Activity