Bell Ringer. Write down ways in which you spend your money. Some examples are entertainment, clothing, and going out to eat. After you have written down a list, try to guess what percentage of your income goes to those areas.

What about Taxes? The average American adult spends about 15% to 25% percent on taxes a year.

Go over Quiz. What are three features of a Bureaucracy? - Please also explain these features in a short sentence.

Chapter 16: Taxes

Expressed Constitutional Limitations Power to tax is the first power given to Congress Limits: Taxes are only for public purposes No export taxes Direct taxes must be based on population Indirect taxes must be same throughout country Direct Tax: taxpayer pays directly to the government Ex. Homeowner pays personal property taxes to gov’t Indirect Tax: passed on to another person or group Ex. Alcohol – tax not on distiller but person who buys alcohol

Types of Federal Taxes Individual Income Tax Largest Source of Revenue April 15 th file tax return Corporate Income Tax Corporations pay tax on net income (complicated) Social Insurance Tax Social Security, Medicare, Unemployment Excise Tax Tax on manufacture, sale or import of goods Estate (Death) & Gift Tax Customs Duties (tariff) Taxes on good brought into the U.S.

Non-Tax Revenue Loans made by Government Canal tolls Fees for: Copyrights Patents Trademarks

Taxes – spend what you have  More of a traditional conservative idea  Smaller government with less programs Borrow money – deficit spending  Typically more of a liberal idea  Provide more services to individuals Both parties in recent years have deficit spent How Does the Government Pay for Things?

China - $900BUnited Kingdom -$250B Japan - $750BBrazil - $180BBrazil - $180B Who do we owe?

Why does the government borrow money? Meet costs of crisis  War  Natural disasters  Economic crisis Finance large projects Pay for deficit financing – spend more than income  Entitlement programs – social security  Health Care reform

Where your money goes SOCIAL SECURITY 19.63% DEPT OF DEFENSE 18.73% UNEMPLOYMENT/ WELFARE 16.23% MEDICARE 12.79% H&H SERVICES 8.19% INTEREST ON DEBT 4.63%

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