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Principles of Finance Videos 156 videos
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Principles of Finance: Unit 1, The Corporation Takes Shape 18 Views
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Description:
Okay, so it's time for the Sauce Company's next funding round. Let's see if they can obtain the capital they need for growth. Not the growth, by the way, that occurs from ingesting a bit too much of the sauce.
Transcript
- 00:00
finance a la shmoop. What is the difference between progressive and
- 00:06
regressive taxes? ah politics. listen to these two words - progressive - sounds good [flag shown]
- 00:15
right? Like a bunch of happy face emojis, a new puppy, or a bright shiny new
- 00:20
electric car moving forward. Pro. Positive. Good. Alright now, what about regressive, evil. [ electric car plugged in]
- 00:27
like going backward. regressing. So, if ever you thought that finance wasn't
Full Transcript
- 00:32
political, well you were so wrong. about a century ago the notion was carried in
- 00:37
the country, that the rich benefit more from society so they should be taxed at [old time city shown]
- 00:43
higher rates .Not ridiculous logic, and probably both left and right can agree
- 00:48
that this notion applies in many cases. But, there's a backdrop here of degree,
- 00:53
meaning how much taxing of the rich is enough? And, how much is too much? So a [ man talking, definitions shown]
- 00:59
progressive tax system taxes people something like - this and every year the
- 01:04
numbers change- so we're just rounding here they to, you know, give you the
- 01:08
gist. Tax free! Ok, so progressive rates might start at like zero tax for the [ chart shown]
- 01:14
first ten thousand dollars of earnings then from 10,000 and 25,000 the rates 10
- 01:19
percent and from 25,000 40,000 the rate might be twenty percent then from 40,000
- 01:24
80,000 rate might be thirty percent and from 80,000 to like a gajillion the rate
- 01:28
might be forty percent . So that's progressive - that is the rate itself- the
- 01:33
tax rate itself goes higher as you earn more money. So let's say you earn 90
- 01:38
grand a year. Remember, that on your first 10,000 you paid no tax. But, if you earned
- 01:43
ninety thousand bucks that year well then on that last ten grand
- 01:48
I either move from 80,000 to 90,000 earnings, representing all that overtime
- 01:53
you put in on weekends and evenings. Well, that last marginal $10,000 gets taxed at [man sleeping at computer]
- 02:01
a forty percent rate! So you keep only six thousand bucks of the ten grand you
- 02:06
worked so hard to earn. You should have been just lazy and
- 02:09
stayed at home instead. And you remember that fact darkly when you try to save up [bag of money]
- 02:13
for your first home. yeah. it's hard to save money, the more money
- 02:17
you make. All right, well anyway that's progressive. The opposite is regressive,
- 02:21
which at its heart doesn't seem particularly evil or bad at all, it just [man talking]
- 02:26
means that everyone is taxed at the same rate. So on a gallon of gas that Bill
- 02:30
Gates consumes, which costs him three bucks a gallon and carries with it and [red car at gas station]
- 02:34
about a dollar in tax, well Bill pays the same tax on that gas as Polly poor
- 02:39
mouse, a waitress at Keens Diner. Rich and poor, in a regressive system pay the
- 02:44
same amount of tax on a gallon of gas and that is considered regressive. The [definition shown]
- 02:49
reason? well Polly's broke and Bill isn't. That dollar
- 02:53
of tax represents a bigger proportion of her income, than it does of his, hence the
- 02:58
scary regressive word. But, we're not making an argument here politically
- 03:03
either way, so don't shoot the messenger. no matter what your view is on a [man holds out hands]
- 03:06
progressive versus a regressive tax system, there's one thing everyone can
- 03:11
agree about where taxes are concerned. It's that you better pay them when the [man screams as he opens front door]
- 03:16
suits come a-knockin, or else.
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