| | 4th grade student can: People can acquire income in several ways, including wages, salaries, and money gifts. Income can be earned or unearned. Workers can improve their ability to earn income by gaining new knowledge, skills, and experiences. Many workers receive employee benefits in addition to their pay. Entrepreneurs, who work for themselves by starting new businesses, hope to earn a profit, but accept the risk of a loss. | 8th grade student can: People can earn income from rent and interest. Wages/salaries minus payroll deductions equal take-home pay. Inflation reduces the purchasing power of income. Government transfer payments provide unearned income to some households. Generally, people earn higher incomes with higher levels of education. | High school graduate can: People’s income reflects choices they have made about jobs and careers, education, and skill development. The wages/salaries paid for a given job depend on a worker’s skills and education, plus the importance of the work to society and the supply of and demand for qualified workers. Social Security and Medicare are government programs that provide insurance against some loss of income and benefits to eligible recipients. Social Security and Medicare are funded by a compulsory payroll tax. People pay taxes on many types of income, such as wages or salaries, interest, dividends, capital gains, tips, commissions, and profit from a self-owned business. Deductions, exemptions, and credits reduce taxable income. |