1. -Government Employees
Government Expenses
Pay for:
-Government Services
-Government Employees
-Revenue Sources
60% to 80% come from taxes, the rest come from user fees, licensing, bonds, etc.

2. -all citizens of all governments pay taxes
Politics of Taxation
-all citizens of all governments pay taxes
-how much is enough???
-citizen revolts may occur if taxes are too high

3. Taxation Limits
-all tax bills must begin in House of Representatives for the national government (Article 1)
-uniformity of taxes
-can’t tax interstate trade or exports (Article 1 Section 9)

4. Taxation Principles
-Adam Smith
Wealth of Nations – said that taxes are fair in a society, and should be based on Ability to Pay
-Progressive Tax – the more money you make, the higher rate you pay (income tax)
Regressive Tax – the less money you make, the more of your money you pay. (like a sales tax, but this will most likely require an explanation) -

5. -Income Taxes based on Taxable Income
-Personal Income Tax based on the money you make and is the largest source of income for the Federal Government.
-Provides a lot of Federal Revenue
-Income Taxes based on Taxable Income
Exemptions
Deductions
Tax Returns
Biggest expense is the military, along with “entitlements” social security and medicare (but we will let Ronald Reagan explain this)
-Corporate Income Tax also exists

7. -Primary revenue for local governments
Property Taxes
-Property Tax
-Primary revenue for local governments
Primarily expense is education,
-Based on estimated value of property
-Stable source of revenue

8. Sales Taxes -Sales Tax -Most sales taxes go to state government
-Easy to collect
-Sales Taxes are Regressive
-Biggest expenditures are usually education and health

9. -Estate Taxes – one time tax on your goods when you die
Other Taxes
-Social Security Taxes – 7.5% of income
-Estate Taxes – one time tax on your goods when you die
-Gift Taxes – anything given to you valued at over $10,000 must be claimed
-Tariffs
-Excise tax – tax on luxury goods that is built into the price of the product (gasoline)
-Sin tax (or vice tax) – tax on things we deem “bad” for us, like cigarettes, alcohol, soft drinks, candy, or in some states, marijuana)

10. Non-Tax Revenue -Fines -Fees, Licenses, Disposal, Permits -Lotteries
-Intergovernmental Revenue
-Selling Excess Land or Property
-Tolls
-Fines
-Fees, Licenses, Disposal, Permits
-Lotteries