Video Resource: Do Taxes Affect the Distribution of Income in the US?
Yes, yes, I know that your taxes are a distant memory at this point, but I thought this 3 minute video (hat tip to Big Picture Blog) using Legos to show how taxes impact each of the five quintiles of income distribution in the US. Spoiler alert: Not much. Other useful concept explored within: difference between pre-tax and after-tax income levels. Ask your students to calculate the average tax rate for each of the five quintiles; they will need to write down the figures as they watch the video.
The math involved to calculate this is:
- Pre-tax income minus Post-tax income = Taxes paid.
- Taxes Paid divided by Pre-tax income = Tax Rate (on percentage basis)
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.