6.3 Financing and Spending the Budget

Do Now:

Who should pay?

Financing the Budget

Income Tax-Constituents pay tax based on income

Progressive Tax-Tax that increases as income increases

Regressive Tax-Tax that increases as income decreases

Flat Tax-Tax born equally independent of incomeTax Return-The official declaration of a constituents income, exemptions, and deductions

Financing the Budget

Corporate Income Tax-Tax on the net income of

businesses

Payroll Taxes- Social Security, Medicare, Unemployment

Excise Tax-Taxes on the sale/consumption of specific

goods

Estate Tax-Tax imposed on a dead person’s assets

Gift Tax-Tax imposed on gifts over $13,000 in value

Custom Duty-Tax imposed on imported goods

Creating the Budget

1. Agencies send budget estimates to the President’s Office of Management and Budget.

2. The OMB and president review and revise the budget.

3. The Budget Committees in congress review the budget with the help of the Congressional Budget Office.

4. Then both houses must pass a joint resolution affirming the budget.

The Budget

Interest-Charges for borrowing moneyDeficit-Yearly shortfall between income and spendingSurplus-Yearly overage between income and spendingPublic Debt-All outstanding debts of the GovernmentEntitlements-Federal benefits paid to eligible partiesDiscretionary Spending-Congress determines every yearMandatory Spending-Spending built into gov’t programs

Spending the Budget

So where exactly does all of the money go?

The Debt

When you spend more than you earn, you end

up in debt!

The Debt

“A national debt, if it is not excessive, will be to us a national blessing.”

Alexander Hamilton

The Debt

So who owns our debt?

6.3 Assignment

Who should bear the burden of financing the government?

Everyone evenly or some more than others?

AndIs debt good/bad for our

country? Who should own it?Spend less or tax more?