Unit 8 – Taxes and Government Spending

Chapter 16 – What the government spend, collects, and owes

How is the government involved in the Economy?

• Tansportation• Education• Product Safety• Worker Safety• Taxation

Public Works Projects

• Publically used facilities, such as schools and highways, built by federal, state, or local governments with public money.– Paid for by taxes– Available to all people…despite what amount they pay in taxes.

The size of government has grown and is continuing to grow. This has lead to a greater need to tax revenue to pay for the increases in

spending. Do you care what the government spends

money on? You should!

Functions of Government

Providing Public GoodsPromoting General Welfare

Regulation and Economic Stability

Providing Public Goods

• Public goods – goods or services that can be used by many individuals at the same time without reducing the benefit each person received. – Do you have the right to property, and to use that

property to build income? – Is that right upheld by the government?

Promoting General Welfare

“What we do, we do for the good of the order”

Income Redistribution – government activity that takes income from some people through taxation and uses it to help citizens in need.

Social Insurance Program Terms

• Social insurance programs- gov. programs that pay benefits to retired, disabled workers and their families.

• Social Security – federal program that provides monthly payments to people who are retired and unable to work.

• Workers Compensation- gov. program that extends payments for medical care to workers injured on the job.

Public Assistance Program Terms

• Public Assistance (welfare)- gov. programs that make payments to citizens based on their need.

• Supplemental security income- federal program that includes food stamps and payments to the disabled and aged.

• Medicaid- state and federal program that helps pay health care costs for low-income and disabled persons

• Medicare- state and federal program that provides health care for the aged.

Regulation and Economic Stability

• Externalities- economic side effects that affect an uninvolved third party, can be negative or positive

• Government can protect us from them, but it might come with an additional cost

Government Regulations

Regulatory Functions of Government

Protect Consumers

Promote Competition

Regulate Negative externalities of Production

Supervise Labor and Relations

Are you a critic of Government Regulation?

1. Public goods (libraries, banks, ect.) should be paid for by private businesses who want to use those services not all taxpayers.

2. Government assistance programs discourage personal initiative and harm self-development.

3. Government regulations raise the price of goods and services.

The National Debt