AMERICAN GOVERNMENTUNIT 16: FINANCING

GOVERNMENTI. Taxes and Other Revenue

Bellringer

Get into groups and complete the Work Sheet. Use the textbook to find the percentages.

Objectives

Explain how the Constitution gives Congress the power to tax and at the same time places limits on that power.

Identify the most significant federal taxes collected today.

Describe the nontax sources of federal revenue.

Fiscal Policy

Governments various means it uses to raise and spend money and thereby influence the nation’s economy

Simple A cut in taxes means more money in the

hands of consumers and their increased spending power means more jobs.

An increase in taxes takes money away from the consumers and so tends to slow the economy and reduce inflation.

Power to Tax

Constitution gives the government power to tax Franklin Why taxes? Raise money and regulate or

discourage harmful activity Licensing is a form of taxation – guns, drugs,

hunting Cant tax religion (1st) and only for debts,

defense, general welfare and exports. Applied equally to all states – only one is

income tax – Civil War. Import tax Cant tax states - fees

Current Federal taxes

“what we pay for civilized society” Page 459 – biased paragraph? Income tax – biggest source of revenue Progressive tax – the higher one’s income,

the higher the tax rate Individual income tax and corporation income

tax Bush passed major tax cuts – now 10% to

35% if you make over $372,950. Corporate – 15% if you make over 50,000 and

35% if you make more than 15 million.

Social Insurance Taxes

OASDI – Old age, survivors, and disability insurance (Social Security)

Medicare – healthcare for elderly Unemployment compensation – benefits paid to

jobless workers Payroll taxes – comes out of your check. You pay

6% and your employer pays 6% - if self-employed, you pay 12%/Medicare is 1.5 and 3%

Regressive tax – tax is levied at the same rate – so poor have to pay a bigger part of their salary.

Some poor have to pay more for FICA then they do income tax

Other taxes and forms of revenue

Excise tax – sales tax, levied on gas, oil, tobacco, alcohol and such

Called hidden, luxury or sin taxes Estate tax on assets of someone who dies –

3.5 mil Gift tax is on a gift from on person to

another - $13,000. Custom Duties – tariffs or import tax – once

the main source of revenue Interest – FED, canal tolls, passports,

patents and such

Review