Federal Budget

The US Federal Budget Prepared by the Office of Management and Budget and the President Submitted to Congress for approval The U.S. fiscal year begins on October, 1st of every year. If there is no approved budget, emergency spending must be passed to keep the government open.

The Full Employment or Standardized budget adjusts to actual deficits or surpluses to eliminate automatic changes in tax revenues. Compare actual government expenditures to those that would have occurred if the economy reached full employment. Cyclical deficit is a by product of the economy’s slide into a recession.

Government spending $$$ out Government Revenue $$ in Balanced budget

Taxes Progressive-the more you earn the more you pay— income tax Proportional-everyone pays the same amount regardless of income-gasoline taxes Regressive-the less you earn the more you pay- sales tax

National Sales Tax A popular suggestion is to eliminate the income tax and replace it with a national sales tax, called the fair tax. The idea is that everyone pays their fair share based on what they spend rather than what they earn.

Flat tax proposal A flat tax imposes the same tax percentage on all individuals regardless of income.