Unit 1. Taxes & Fairness: The Basics

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TaxJazz’s™ first unit—Taxes, Society, and Fairness—provides the basic framework for understanding taxation and its role in society. It consists of three topics which were designed to be taught together, but could be taught independently. The basic materials were designed to be taught in approximately 200 minutes. The materials, however, could be shortened or lengthened (using additional materials TaxJazz has, or other materials a teacher desires). 

The Unit provides an introduction to three fundamental issues that are necessary for any discussion about taxation. Additionally, they introduce basic vocabulary and concepts such as the difference between marginal and effective tax rates and; the difference between a flat and a progressive tax. Understanding these terms and concepts enables people to form knowledgeable opinions about tax and to understand and participate in debates about tax. Each topic contains an exercise for the students to complete.

Topic 1: Why we have taxes. This topic explores why we have government, what government does and introduces the concept of public goods. It makes the vital connection between taxing and spending that even many educated people overlook.

People differ about how big they want government to be and what they want government to do. Most people, however, want some type of government. That government needs money to do the things its citizens want it to do. There are several ways governments can obtain the necessary funding. They could borrow it, for example, or they could confiscate property, ask people to contribute money voluntarily, or pass a law raising the money through taxation. 

Topic 2: Basic limitations on the taxing power. 

This topic briefly examines the limitations of taxation: What, exactly, is a tax? Who (what) can tax? What kind of structural limits are there on taxation? Can different governments tax the same thing?

Topic 3: What is a fair distribution of tax burdens? 

This topic, the heart of Unit 1, discusses distributive justice generally and then looks at it in a tax context. Different taxes spread the tax burden among the population in different ways. The topic begins with a discussion of fairness from the perspective of distributing benefits (goods). This avoids the polarizing issue of taxation. It then transitions to discussing fairness in the context of distributing the burden of taxation. To do this, the topic examines the components of tax burdens: tax bases and tax rates. The unit concludes with an exercise in which students act as consultants to city council and advise the council as to which of five tax proposals it should choose.