Taxes and Taxes and SpendingSpending

The National BudgetThe National Budget

Federal government keeps track Federal government keeps track of how money is spent over a of how money is spent over a

period of time using a period of time using a budgetbudget……

called the national budget.called the national budget.

Money Available = Money Available =

RevenueRevenue

BudgetsBudgets A budget is A budget is balancedbalanced when when

revenues equal expenditures.revenues equal expenditures.

Deficit = Deficit = spend more money than you spend more money than you make make

Government spends more money than they Government spends more money than they have…they must borrow to spend = have…they must borrow to spend = deficit deficit spendingspending

Surplus Surplus = money left over after all expenses = money left over after all expenses are paidare paid

Fiscal PolicyFiscal Policy

Policy about spending and taxationPolicy about spending and taxation Based on deficit and surplus Based on deficit and surplus

Where does the Where does the government’s money go?government’s money go?

DefenseDefense FBI: investigate federal crimes (Dept. of FBI: investigate federal crimes (Dept. of

Justice)Justice) DEA: stop illegal drugs from entering the DEA: stop illegal drugs from entering the

U.S.U.S. ATF: enforce federal laws dealing with ATF: enforce federal laws dealing with

alcohol, tobacco, firearms, explosives and alcohol, tobacco, firearms, explosives and arsonarson

Where does the Where does the government’s money go?government’s money go?

Entitlement programs Entitlement programs

(provide individuals with financial benefits)(provide individuals with financial benefits) Dept. of Health and Human ServicesDept. of Health and Human Services

Protect the health and safety of Americans and provide Protect the health and safety of Americans and provide human serviceshuman services

Dept of Health & Human Dept of Health & Human Services AgenciesServices Agencies

CDCCDC-protect nation’s health and conduct -protect nation’s health and conduct medical researchmedical research

MedicareMedicare-look after the health of elderly -look after the health of elderly Americans or those with special situations Americans or those with special situations (65+) (65+)

MedicaidMedicaid- look after health of low-income - look after health of low-income citizenscitizens

Social Security-Social Security- provides monthly provides monthly benefits to retired and disabled workers benefits to retired and disabled workers (65 +)(65 +)

Department of TransportationDepartment of Transportation Set regulations for all public carriersSet regulations for all public carriers Planes, trains, automobiles, highways, ferry Planes, trains, automobiles, highways, ferry

systemssystems

National Transportation Safety Board National Transportation Safety Board (NTSB)(NTSB) Ensure transportation system meets acceptable Ensure transportation system meets acceptable

safety standardssafety standards

National SecurityNational Security

CIACIA-deal with threats from foreign countries-deal with threats from foreign countries

Dept. of Homeland Security-Dept. of Homeland Security- fight terrorism fight terrorism Patriot ActPatriot Act FEMA: assist with disaster relief FEMA: assist with disaster relief

U.S. Citizenship and Immigration ServicesU.S. Citizenship and Immigration Services Control immigration and naturalization Control immigration and naturalization

(process by which aliens become citizens)(process by which aliens become citizens)

To spend money… the To spend money… the government must have government must have money.money.

How does the government make How does the government make money?money?

Sources of RevenueSources of Revenue TaxesTaxes Income taxIncome tax: takes a % of person’s/ company’s : takes a % of person’s/ company’s

earned incomeearned income Determined by Determined by tax returntax return (filed annually to show (filed annually to show

earnings and deductions)earnings and deductions)

Progressive taxation-Progressive taxation- higher a person’s earnings, higher a person’s earnings, the higher the rate of taxationthe higher the rate of taxation

Regressive taxation-Regressive taxation- higher rate of taxation higher rate of taxation

the poorer a person isthe poorer a person is Proportional taxation-Proportional taxation- all taxpayers pay the same all taxpayers pay the same

% no matter their income% no matter their income

Excise tax-Excise tax- charged on the production and charged on the production and consumption of particular goods and consumption of particular goods and services (ex. telephone and gasoline)services (ex. telephone and gasoline)

Estate taxEstate tax – paid on the transfer of property – paid on the transfer of property through inheritancethrough inheritance Property is not taxedProperty is not taxed

Corporate tax-Corporate tax- levied on a company’s levied on a company’s earnings and its payrollearnings and its payroll

Other sources of revenueOther sources of revenue TariffsTariffs- paid on imports- paid on imports FinesFines- penalties levied against individuals - penalties levied against individuals

(ex. Pollution)(ex. Pollution)

Government bonds-Government bonds- government-issued government-issued certificates purchased by an individual or certificates purchased by an individual or corporationcorporation Allows gov’ts to borrow money on the promise Allows gov’ts to borrow money on the promise

to repayto repay