taxes and government spending chapter 14. what are taxes? »a required payment to a local, state, or...
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Constitution »Social Contract »Constitution »Article 1 »Limits to taxation »For Common defense »For general welfare »No taxes on churches »No taxes on exportsTRANSCRIPT
Taxes and Government Spending
Chapter 14
What are taxes?» A required payment to a local,
state, or federal government» Becomes government revenue
Constitution» Social Contract» Constitution
» Article 1» Limits to taxation
» For Common defense» For general welfare» No taxes on churches» No taxes on exports
Tax Bases & Tax Structure
» Tax base: the income, property, goods, or services subject to taxes» Income tax (corporate & personal)» Sales tax» Property tax
Tax Structure» Proportional:
» percentage of income paid in taxes remains the same for all incomes
» Progressive» Percentage of income paid in taxes increases
as income increases» Regressive
» Percentage of income paid in taxes decreases as income increases (sales tax)
Characteristics of a Good Tax
» Simplicity» Efficiency» Certainty» Equity
» Fair: benefits received» Fair: ability to pay
Tax Revenue and Tax Rates
» Laffer Curve
Taxes» Changes price of product
» Supply» Demand» Incidence of a Tax: final burden of a
tax
Federal Tax» Individual Income Tax» Corporate Income Tax» Social Security, Medicare and
Unemployment taxes» Other Taxes
» Excise» Estate» Gift» Import
Income Tax: Personal & Corporate
» Pay as you earn» Withholding» Filing tax return
» Taxable income» Personal exemptions» Deductions» Tax bracket
Federal Insurance Contribution Act
» Social Security» 1935 Old Age Survivors and Disability
» Medicare» National health insurance program for
people over 65
Unemployment Tax» Paid by employers» Insurance policy for workers who might
be laid off» California borrowed $40 million a day
during the Great Recession» raise the taxable base from $7,000 (CA has
the lowest allowable base), » raise the maximum tax rate » reduce the maximum weekly benefit.
Other Taxes» Excise tax: tax on sale or manufacture of
goods - gasoline, cigarettes, alcohol» Estate tax: tax on property left by a dead
person, prior to inheritance» Gift Tax: money or property given to a
living person; to keep people from avoiding estate tax; give up to $10,000 tax free
Other taxes» Import Tax or tariffs
» Goods brought into USA from another country
» Limits competition
» Tax incentive: sin taxes-- encourage people no to smoke, drink alcohol
Federal Spending» Mandatory
required by existing law» Discretionary
» Government planners can make a choice
Mandatory» Entitlement Programs
» Social security: future» Medicaid» Supplemental Security Income
» Food stamps» Veterans Benefits» Unemployment Insurance
Discretionary» Defense
» Military» Civilians working
for the military
» Education» Training» Scientific research» Student loans» Technology» Parks» Law enforcement» Environmental cleanup» Housing» etc
Federal Aid » State» Local
» Emergency relief» Programs
» Education» highways
State and Local Taxes & Spending
» State Budgets» Operating budget» Capital budget
» Balanced Budgets
State Spending» Education» Public safety» Highways / transportation» Public welfare» Arts & Recreation» Administration
State Revenue» No tax » Federal property» Nonprofit organizations» Religious groups» Charities
» Tax Exempt
State Taxes» Sales tax» State income tax» Corporate income tax» Property tax
» Real property - land» Tax assessor
» Personal property - jewelry, stocks
Local Government Spending and Revenue
» City» County» 87,000 local government units
» Water district» School districts
Local Government Jobs» Public schools» Law enforcement» Fire protection» Parks» Public health
» Public transportation
» Elections» Record keeping» Social services