1. [ 8.2 ] Federal Taxes Learning Objectives
Identify the basic characteristics and importance of individual and corporate income taxes at the national level.
Explain the purpose and importance of Social Security, Medicare, and unemployment taxes.
Identify other types of taxes levied at the national level.

2. Individual and Corporate Income Taxes
Individual Income Taxes
Individual Tax Brackets
Tax Withholding
Filing a Tax Return
Corporate Income Taxes

3. Individual and Corporate Income Taxes
Based on this graph, what effect would an economic downturn, with lower corporate and individual earnings, have on government receipts? Explain.

4. Social Security, Medicare, and Unemployment Taxes
In addition to withholding money for income taxes, employers withhold money for taxes authorized under the Federal Insurance Contributions Act, or FICA. FICA taxes fund two large government social-insurance programs, Social Security and Medicare. Employees and employers share FICA payments.

5. Social Security, Medicare, and Unemployment Taxes
Social Security Taxes
Medicare Taxes
Unemployment Taxes

6. Social Security, Medicare, and Unemployment Taxes
The gap between what Medicare takes in and what it spends has been widening.
What are two possible solutions to the problem presented by this graph?

7. Other National Taxes Excise Taxes Estate Taxes Gift Taxes
Tariffs—Taxes on Imported Goods
Taxes That Affect Behavior

8. Other National Taxes
How does this graph support the assertion that tariffs today are mainly intended to protect American farms and businesses from foreign competition?

9. Quiz: Individual and Corporate Income Taxes
What is a person’s taxable income?
A. the income subject to the highest tax rate
B. the income subject to the lowest tax rate
C. gross income minus exemptions and deductions
D. all the money a person earns in a given year

10. Quiz: Social Security, Medicare, and Unemployment Taxes
Which idea or concept underlies Social Security, Medicare, and unemployment taxes?
A. establishing a proportional taxation system
B. ensuring that people do not have to save for their retirement
C. correcting inequities in the individual income tax
D. supporting people who have limited ability to support themselves through work

11. Quiz: Other National Taxes
Why do we have tariffs today?
A. to protect American farmers and industries from foreign competitors
B. to discourage people from buying harmful products
C. to keep people from avoiding estate taxes by giving away money before they die
D. to encourage energy conservation and other worthwhile activities

12. [ 8.3 ] Federal Spending Learning Objectives
Analyze categories of expenditures in the U.S. federal budget.
Describe major entitlement programs.
Identify major types of discretionary spending in the federal budget.

13. Mandatory and Discretionary Spending
What is the largest spending category in the budget represented here?

14. Government Entitlements
Social Security
Medicare
Medicaid
Other Mandatory Spending Programs

15. Government Entitlements
As the nation gets older, the top of the population pyramid gets larger.
Compared to 1980, how will the ratio of workers to Social Security recipients have changed by 2035?

16. Spending on Discretionary Programs
Defense Spending
Other Discretionary Spending
Federal Aid to State and Local Governments

17. Spending on Discretionary Programs
About what percentage of discretionary spending went to defense in the budget year shown?

18. Quiz: Mandatory and Discretionary Spending
The portion of the budget about which lawmakers today make year-to-year spending decisions is approximately
A. two thirds of the budget.
B. all of the budget.
C. one third of the budget.
D. one half of the budget.

19. Quiz: Government Entitlements
What key issue challenges the largest entitlement programs in the United States?
A. an aging population
B. skyrocketing rates of taxation
C. a shrinking number of beneficiaries
D. lack of public support for aiding retirees

20. Quiz: Spending on Discretionary Programs
About how much of the federal government’s discretionary spending currently goes toward defense?
A. about one eighth
B. about one fourth
C. about half
D. about three fourths