Financing Government Chapter 16

Taxes and Other Revenue Section 1 Taxes and Other Revenue

Fiscal Policy Fiscal policy is the various means the government uses to raise and spend money to influence the nation’s economy.

Taxation “In this world nothing can be said to be certain, except death and taxes” – Benjamin Franklin First power granted to Congress in the Constitution. Mostly to raise money to pay for costs of operating the federal government. Congress’s power to tax is limited by the provisions in the Constitution.

Current Federal Taxes Income Tax Individual Income Tax Authorized with the passage of the 16th Amendment Government’s largest source of income Progressive Tax Individual Income Tax Tax is levied on each person’s taxable income 10%-35% Taxes were decreased in 2001, 2002, and 2003 and cuts were extended in 2010.

Taxes Cont… Social Insurance Taxes OASDI (Social Security), Medicare, & Unemployment taxes Social Security and Medicare paid by the employee and the employer. Unemployment paid by the employer Regressive Taxes

Taxes Cont… Excise Taxes Estate and Gift Taxes Customs Duties Tax laid on the manufacture, sale, or consumption of goods, and or the performance of services Gas, tobacco, oil, etc… Estate and Gift Taxes Estate – levy imposed on the assets of someone who dies Gift – levy imposed on a gift from one living person to another Customs Duties Taxes on goods imported into the U.S.

Nontax Revenue Miscellaneous receipts from a variety of sources. Interest on federal loans Canal tolls Fees from passports, copyrights, patents, and trademarks Sale or lease of public lands Fines imposed by federal courts.