Personal Finance in the News, Class Discussion, or Assignment: Who do you believe in the current political debate over who pays what in taxes?

Teaching Tip:  This discussion can be developed based upon an out of class assignment (your students prepare to answer the discussion questions before class), or if you have access to the internet in class and can project it so that the entire class can see the graphs, it works very well as an in class presentation and discussion.

As we know from Principle 4: Taxes Affect Personal Finance Decisions. In the near future it is quite possible that personal tax rates will change quite a bit.  When it comes to changing tax rates, you are likely to hear arguments saying that “the rich don’t pay enough in the way of taxes” countered with “the rich pay more than their fair share”.

In order to develop an educated opinion on this matter there are a number of questions that you might want to ask, including:

Have taxes kept up with wealth accumulation?

Who doesn’t pay federal taxes?

Do rich people pay a lower tax rate?

Who really benefits from tax breaks?

The Washington Post recently took a look at these questions in their Reality Check column article “Answers to Key Questions About Taxes.”  Take a look at the Washington Post’s responses to these questions.  If you’re listening to any of the recent political debates, you’ll notice that a lot of the discussion looks at wealth, personal finance, and fairness in the economy – and these questons are at the heart of much of the debate.

Discussion questions:

  1. Has the tax rate kept up with trends in income (hint: take a look at “Paying a Fair Share?”)?  Do the wealthy pay a smaller or larger percent of their income to taxes now than in past years?
  2. Now look at the reality check “Do Rich People Pay a Lower Tax Rate?”  What share of income goes to the top 20% of those with the highest incomes? Now, what percent of the federal tax burden is paid by the top 20% of those with the highest income? Also take a look at the charts for “Who Doesn’t Pay Federal Taxes.”
  3. What is your opinion on tax reform?  Take a look at some of the tax breaks in the graphs “Who Really Benefits from Tax Breaks?” and the video ”Why Boats Get Tax Breaks.”  Should taxes be raised on the highest income earners?  Why is it so hard for Congress to agree on tax reform.  Be prepared to discuss your opinion with the class.

 

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