Theme 3: Fairness in TaxesLesson 1: How to Measure Fairness
One to four hours
To help students understand that people have difficulty agreeing on a fair tax because of different values and priorities
Students will be able to
- identify and describe two criterion of tax fairness: benefits received and ability to pay.
- distinguish between wealth and income as measures of ability to pay.
In the United States, people are treated equally under the law. For example, people who have the same income should be taxed in the same way. Two principles of taxation relate to equal treatment in tax matters: benefits received and the ability to pay.
Benefits received: According to this principle, those who receive or benefit from public service should pay for it. People who use the toll road should pay the toll. People who use the park should pay the park fees. Some taxes work this way. It is not always easy to figure out the benefits different people receive from some public services, such as national defense.
Ability to pay: Some people have higher incomes or more possessions than others. Under the ability to pay principle, these people pay more in taxes simply because they can afford to pay more.
ability to pay
A concept of tax fairness that states that people with different amounts of wealth or different amounts of income should pay tax at different rates. Wealth includes assets such as houses, cars, stocks, bonds, and savings accounts. Income includes wages, interest and dividends, and other payments.
A concept of tax fairness that states that people should pay taxes in proportion to the benefits they receive from government goods and services.
Show Slide Show: Theme 3 Overview: Fairness in Taxes or present the information orally from the background information above.
Print and distribute Info Sheet 1: What Is Fair? to students. Organize students into three groups and assign each group one of the tax situations detailed on the Info Sheet. Have each group decide whether measures can be taken to make the tax fairer to everyone, or whether the tax is fair enough as is. Have each group present its decision to the class.
Direct students to Student Lesson: How to Measure Fairness.
Have students complete one or more of the following activities:
Activity 1: Tax Benefits-Match the tax to the benefit received.
Activity 2: State and Local Sales Tax-Take a virtual fieldtrip to learn about sales tax, property tax, and other state taxes.
Activity 3: What Makes Taxes Fair?-Assess the fairness of different taxes and fees.
Print Worksheet: Tax Fairness and distribute it to students.
Have students work individually or in small groups to research one of the characters below, or use your own characters. Have students write letters to a government official expressing their views on a proposed income tax to be used to generate revenues for public security and defense. Written from the point of view of their characters, letters should describe and support reasons for taking a particular position on the proposed tax. Students should consider how their character would feel about benefits received and ability to pay.
- Robin Hood
- John Calvin
- Joan of Arc
- Mao Zedong (Mao Tse-tung)
- Henry Ford
Assessment should be based on the support and credibility of the position taken and the quality of the writing. Share letters with the class.
Review with students the concept of ability to pay and the differences between wealth and income. Examine benefits received as a measure of fairness. According to this principle, people who use a facility or service are the ones who should pay for it. As an example, mention the admission and parking fees that help pay for the operation and maintenance of national parks. Ask for other examples of benefits received. Remind students of the difficulty in reaching agreement on a fair tax because people have different values and priorities.
Direct students to complete Assessment: How to Measure Fairness.
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