Teaching Tip:  One of the difficulties in presenting the material in Chapter 4, Tax Planning and Strategies comes from the fact that the tax material is often changing. Presently the tax code is a big part of the current political debate with conflicting facts often presented by the different candidates.  This is an assignment that can be made before class, or alternatively, you could just as easily present this material in class and develop the discussion as it is presented.  In addition, an alternative assignment is to have your students choose any of the questions listed below and provide a short written response to them relying on the information in the linked article.

When you look at the current political debates, one thing is clear – no one really likes the current personal tax code.  To justify their positions, various politicians present different and conflicting figures about who pays what in the way of taxes.

After listening to the politicians and the pundits you may have several questions such as:

Have taxes kept up with wealth?

Who doesn’t pay federal taxes?

Do rich people pay a lower tax rate?

Who really benefits from tax breaks?

Why do boats get tax breaks?

On October 5^th The Washington Post ran an article titled, “Answers To Key Questions About Taxes,” which answer these questions through a series of very informative graphs.  For example when examining the question “Do rich people pay a lower tax rate?” The Washington Post presents the answer through eight different graphs.  It starts by looking at what share of income is received by the five quintiles of tax payers, then looking at what percent of total tax revenue comes from each of the different quintiles and so forth.  The end result is that you have a much better understanding of who pays what in the way of taxes.

Check out the article “Answers To Key Questions About Taxes.”  You will find that the graph explanations are simple, straightforward and easy to read and understand.  Not a bad way to go when you are trying to wrap your brain around topics that can easily be contorted to fit the current political dialogue.

Discussion questions:

1. What did you learn that surprised you about our current tax code?  Be prepared to discuss this in class.