6.3 Financing and Spending the Budget Do Now: Who should pay?

Financing the Budget Income Tax-Constituents pay tax based on income Progressive Tax-Tax that increases as income increases Regressive Tax-Tax that increases as income decreases Flat Tax-Tax born equally independent of income Tax Return-The official declaration of a constituents income, exemptions, and deductions

Financing the Budget Corporate Income Tax-Tax on the net income of businesses Payroll Taxes- Social Security, Medicare, Unemployment Excise Tax-Taxes on the sale/consumption of specific goods Estate Tax-Tax imposed on a dead person’s assets Gift Tax-Tax imposed on gifts over $13,000 in value Custom Duty-Tax imposed on imported goods

Creating the Budget 1.Agencies send budget estimates to the President’s Office of Management and Budget. 2.The OMB and president review and revise the budget. 3.The Budget Committees in congress review the budget with the help of the Congressional Budget Office. 4.Then both houses must pass a joint resolution affirming the budget.

The Budget Interest-Charges for borrowing money Deficit-Yearly shortfall between income and spending Surplus-Yearly overage between income and spending Public Debt-All outstanding debts of the Government Entitlements-Federal benefits paid to eligible parties Discretionary Spending-Congress determines every year Mandatory Spending-Spending built into gov’t programs

Spending the Budget So where exactly does all of the money go?

The Debt When you spend more than you earn, you end up in debt!

The Debt “A national debt, if it is not excessive, will be to us a national blessing.” Alexander Hamilton

The Debt So who owns our debt?

6.3 Assignment Who should bear the burden of financing the government? Everyone evenly or some more than others? And Is debt good/bad for our country? Who should own it? Spend less or tax more?