Taxation and Budget – ch 25
Major U.S. Taxes
Personal Income Granted by the When do income taxes have to be filed?
Corporate income –
Social Insurance ExciseEstate –
Inheritance Gift Sales Property –
Taxation
Revenue –
Expenditures –
60-80% of state and local government revenue comes from taxation.
Intergovernmental Revenue Example – states receive a big chunk of money from the Federal Government. Local governments then can
get some of that money from the state.
What percent of federal government revenue comes from taxes?
Taxation problems
The government sometimes abuses its power to tax which leads to revolts.
Stamp Act (1765) –
Tea Act (1773)British taxes lead to the American Revolution where the United States became a free country after defeating
England.
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United States Taxation
Shay’s Rebellion 1786) –
Tariff of 1828 –
Tarif Secession – Separate from the nation.
Taxation powers
What was the 1st government of the US?
What was the national government not allowed to do under the Articles of Confederation?
What did the Constitution establish?
Limits on taxation
The Constitution gives the government the power to tax.
What are Appropriations Bills and where are they introduced?
All national taxes are the same throughout the country.
Which amendment stated this?
Tax Classifications
Progressive tax –
Regressive tax –
Proportional tax –
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Income Tax
Tax on income
What did the 16th amendment (1913) do?
What are the 2 types of income types?
Tax Return
Deadline is ________ taxpayers fill out a tax return and send it to the Internal Revenue Service (IRS).
What is an exemption?
What are deductions?
Are deductions taxed?
Everything else is taxable income.
Sales Tax
Tax paid at the time of purchase
Where is the revenue sent?
Many state governments exclude necessary items from the sales tax.
North Carolina is the 1st weekend in August.
Paying Income Tax
_____________________ withhold funds from checks to pay the state and national government.
Why do they do this?
Some taxpayers receive a _________________.
Income tax is a progressive Tax
People with _______________________________ pay a ______________________________________ in taxes.
There are tax percentage rates of 10%, 15%, 25%, 28%, 33&, and 35%.
What is the main reasoning behind progressive taxes?
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Property Tax
What does property tax asses?
Who sets the tax rate?
Property taxes have increased steadily over the years.
Tariffs
Designed to ________________________ and ________________________________________.
Products are made cheaper in other countries and brought to America.
When America charges a tariff, the other country charges a tariff on American goods.
Tariffs have caused many problems in U.S. history.
Non-Tax Revenue
The government will _______________________________________.
The government will charge __________________ for the use of roads and canals.
The government will charge ___________ for driving, hunting, fishing, and getting married.
______________________ (traffic)
Government run lotteries to provide revenue, but they are controversial.
Budget
Budget –
Why do governments create budgets?
Two parts What is a fiscal year?
What does the Office of Management and Budget (OMB) do?
The OMB estimates the government’s __________________.
The completed budget is about 1000 pages long.
Mandatory spending –
Ex. Social Security, interest payments on the national debt.
Discretionary spending 4
Passing the Budget
Where does the President send the budget?
Who must pass the appropriations bill?
Congress frequently changes the budget.
What is every budget filled with?
State budgets follow the same process as the national budget. (look on page 683)
Why do budgets change from year to year?
Budget Deficits
When do deficits occur?
The U.S. budget had a deficit from 1968-1996 (page 690)
When governments are forced to do more without raising taxes, what does this force them to do?
Borrowing Money
Why does the government borrow money?
Where does most of the money come from?
The government pays off the bonds as they come due.
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Who owns a great amount of the U.S. bonds – about $900 billion?
National Debt
What is the National Debt?
Goes up with each deficit and accumulates interest.
Interest – fee paid for the use of money
1996 – Interest was $345 billion. The government borrows to pay off the interest.
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Balancing the Budget
Balanced budget What did Republicans introduce in 1995?
Did it pass?
Many state constitutions require balanced budgets with not borrowing.
Rely on the emergency funds to pay off debts when state economy is struggling.
Automatic Stabilizers
What are automatic stabilizers?
Examples?
Chapter 26.1 – International Trade and Its Benefits
Why Nations Trade
In 2005, what percentage of all goods produced in the US were exported?
A larger amount of goods were imported or purchased from abroad.
Why can it be good to import goods?
How do nations solve the problem of scarcity?
Why do nations trade goods and services?
Comparative Advantage
What is comparative advantage?
Comparative Advantage leads nations to ____________________________.
What does specialization allow countries to do?
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What 2 things does international trade accomplish?
1.
2.
Barriers to International Trade
What does comparative advantage allow foreign countries to do?
Why would a government impose trade barriers?
What are the 2 most common trade barriers used?
What is the goal of a tariff?
Why do countries set quotas?
Trade Agreements
In general, trade barriers cost more than the benefits gained.
What do most countries try to achieve with other nations?
What trend has the world been seeing lately between nations?
What is the EU?
How is trade set up in the EU?
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NAFTA –
Opponents of NAFTA –
Supporters of NAFTA –
Financing Trade
Different nations use different currencies as a medium of exchange.
What is the exchange rate? Why is it necessary?
Balance of trade –
What happens if a nation’s currency depreciates? What will a nation most likely do?
What will happen if a nation’s currency appreciates?
What is a trade surplus?
Trade deficit?
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