Raising Money Types of Taxes Managing the Country’s Money

Chapter 12 Section 3 P

 Balanced Budget – revenues = expenditures (income) = (outgoing)  Surplus – an excess of money  Deficit – shortage of money  Audit – careful examination by accountants of all revenues and expenditures

Internal Revenue Service Collects taxes Agency of U.S. Department of Treasury U.S. Customs Service Collects tarifs on imported goods Agency of Department of Homeland Security State & Local Tax Agencies State: income taxes Inheritance taxes Local: Property tax State Tax Agencies State income taxes Inheritance taxes Local Tax Agencies Local property

FEDERAL LEVELSTATE & LOCAL LEVEL  U.S. Department of Treasury  Authorized by Congress  Spends federal tax dollars  Comptroller  Authorized by:  State Legislature  City Council  Acts as watchdog of Treasury  Responsible for ensuring public funds spent as allocated

 Governments collect money to pay for goods and services citizens want  BUDGET – lists the amount and sources of:  Expected Revenue – money your going to make/get  Money income  Proposed expenditures- money your going to spend  Money outgoing

POTUS & O.M.B draw up Budget POTUS proposes budget to Congress Legislative branch passes the budget Executive Branch spends money according to the budget

Evaluate programs Effectiveness Funding needs Creates Budget Expected tax Revenue Proposed Expenditures Advises POTUS Together establish priorities

$3.8 trillion budget proposal for fiscal year 2011 includes billions to put people back to work and imposes new fees on some of the nation's largest banks

POTUS SENDS budget to Congress Congress STUDIES the Budget House of Reps and Senate DEBATE budget Both houses APPROVE final version of budget Budget is passed as APPROPRIATION BILL Bill sent to POTUS for APPROVAL or VETO VETO = Back to Legislature Approval = Law Budget is implemented – taxes spent

 Balanced Budget – revenue equals expenditures money collected EQUALS money spent  Surplus – excess of money money collected GREATER money spent  Deficit – shortage of money money collected LESS THAN money spent If there is a deficit then government must borrow money to pay for difference between income and expenses – Government must pay interest on money it borrows  National Debt – deficit + interest on borrowed money

There is no constitutional limit on the size of the national debt, congress establishes a limit, but can raise the limit through a vote

 Audit - examination by an accountant of a government’s income and expenditure  The U.S. Government Accountability Office performs audits on most federal expenditures