How a Bill Becomes a Law Play “The making of a Law”- 20 minutes

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Taxes “What we pay for civilized society” Oliver Wendell Holmes

Power to Tax Expressed constitutional limitations Expressed constitutional limitations Taxes may be levied only for public purposes Taxes may be levied only for public purposes Export taxes are prohibited Export taxes are prohibited Direct taxes must be equally apportioned among the states according to their populations Direct taxes must be equally apportioned among the states according to their populations Indirect taxes must be levied at the same rate throughout the country. Indirect taxes must be levied at the same rate throughout the country.

Power to Tax Implied limitation on the power to tax State and local governments Implied limitation on the power to tax State and local governments The Federal Government The Federal Government may not tax State or local governments in the exercise of their governmental duties may not tax State or local governments in the exercise of their governmental duties Federal can’t tax State’s for revenue made through Federal can’t tax State’s for revenue made through Vehicle registration Vehicle registration Property taxes Property taxes may tax nongovernmental State and local activities may tax nongovernmental State and local activities tax on State-sold liquor tax on State-sold liquor

Progressive Taxes Progressive- tax levied according to level of income Progressive- tax levied according to level of income Income taxes- tax levied on the individuals salary or wages (income) Income taxes- tax levied on the individuals salary or wages (income) Income Tax brackets in U.S. Income Tax brackets in U.S. $0 - 7,55010% $0 - 7,55010% $7, ,65015% $7, ,65015% $30, ,20025% $30, ,20025% $74, ,80028% $74, ,80028% $154, ,55033% $154, ,55033% $Above 336,55035% $Above 336,55035%

Bush tax cuts

Regressive Taxes Regressive Taxes Regressive- tax levied at a flat rate Regressive- tax levied at a flat rate Social security- 6.2% on earnings up to $94,200 Social security- 6.2% on earnings up to $94,200 A person who makes $30,000 a year pays $1,860 (30,000*.062) in tax or 6.2% of wages b. A person who makes $200,000 a year pays $6,045 (97,500*.062) in tax or 3% of wages c. A person who makes $500,000 a year still pays $6,045 in tax (97,500*.062) or 1.2% of wages A person who makes $30,000 a year pays $1,860 (30,000*.062) in tax or 6.2% of wages b. A person who makes $200,000 a year pays $6,045 (97,500*.062) in tax or 3% of wages c. A person who makes $500,000 a year still pays $6,045 in tax (97,500*.062) or 1.2% of wages Lower incomes families hit harder Lower incomes families hit harder

Federal Budget

How is the federal budget created? “No money shall be drawn from the treasury, but in consequence of appropriations made by law” Article I sec. 9

Two Types of spending Controllable spending (Discretionary) Controllable spending (Discretionary) Congress and the President decide how much will be spent each year Congress and the President decide how much will be spent each year Appropriations- assigning to particular use Appropriations- assigning to particular use Military equipment Military equipment Environmental protection Environmental protection

Uncontrollable Spending Uncontrollable spending- 80% of spending Uncontrollable spending- 80% of spending Mandatory uncontrollable spending Mandatory uncontrollable spending Interest on public debt Interest on public debt Entitlements- Benefits that must be paid to all those who meet the eligibility requirements Entitlements- Benefits that must be paid to all those who meet the eligibility requirements Social security Social security Medicare Medicare Medicaid Medicaid Food stamps Food stamps Unemployment insurance Unemployment insurance