-Government Employees Government Expenses Pay for: -Government Services -Government Employees -Revenue Sources 60% to 80% come from taxes, the rest come from user fees, licensing, bonds, etc.

-all citizens of all governments pay taxes Politics of Taxation -all citizens of all governments pay taxes -how much is enough??? -citizen revolts may occur if taxes are too high

Taxation Limits -all tax bills must begin in House of Representatives for the national government (Article 1) -uniformity of taxes -can’t tax interstate trade or exports (Article 1 Section 9)

Taxation Principles -Adam Smith Wealth of Nations – said that taxes are fair in a society, and should be based on Ability to Pay -Progressive Tax – the more money you make, the higher rate you pay (income tax) Regressive Tax – the less money you make, the more of your money you pay. (like a sales tax, but this will most likely require an explanation) -

-Income Taxes based on Taxable Income -Personal Income Tax based on the money you make and is the largest source of income for the Federal Government. -Provides a lot of Federal Revenue -Income Taxes based on Taxable Income Exemptions Deductions Tax Returns Biggest expense is the military, along with “entitlements” social security and medicare (but we will let Ronald Reagan explain this) -Corporate Income Tax also exists

-Primary revenue for local governments Property Taxes -Property Tax -Primary revenue for local governments Primarily expense is education, -Based on estimated value of property -Stable source of revenue

Sales Taxes -Sales Tax -Most sales taxes go to state government -Easy to collect -Sales Taxes are Regressive -Biggest expenditures are usually education and health

-Estate Taxes – one time tax on your goods when you die Other Taxes -Social Security Taxes – 7.5% of income -Estate Taxes – one time tax on your goods when you die -Gift Taxes – anything given to you valued at over $10,000 must be claimed -Tariffs -Excise tax – tax on luxury goods that is built into the price of the product (gasoline) -Sin tax (or vice tax) – tax on things we deem “bad” for us, like cigarettes, alcohol, soft drinks, candy, or in some states, marijuana)

Non-Tax Revenue -Fines -Fees, Licenses, Disposal, Permits -Lotteries -Intergovernmental Revenue -Selling Excess Land or Property -Tolls -Fines -Fees, Licenses, Disposal, Permits -Lotteries