1. Revenue and Expenditures
U.S. Government

2. Power to Tax Article I Section 8 Clause 1
This power is given to Congress
The power to tax is limited-Cannot tax a church service
Cannot tax exports
Direct taxes must be in proportion to state population
Exception-Federal Income Tax- 16th Amendment 1913

3. Income tax
It is progressive.  The more you earn, the higher percentage you pay.
Produces the largest amount of federal revenue
Deduction-what you are allowed to deduct from your taxable income value
Ex-mortgage interest, charitable contributions
Some people pay no income tax due to deductions and tax credits (usually low income earners)
Bottom rate-10% up to $19K (used to be $9k)Top Rate-37% (was 39.6%) 7 brackets

4. Income Tax cont'd Most people pay through paycheck withholdings
3 federal withholdings: Social Security (OASDI), Medicare, and unemployment- These are regressive taxes. They are set at a fixed rate
If your employer takes too much out, you get a refund.  If they take too little, you have to pay.

5. Excise taxes
Tax laid on the manufacture, sale, or consumption of goods.
Excise taxes on oil, tobacco, alcohol, firearms, phone services, airline tickets.
Usually called 'hidden taxes'. Can be called a luxury tax or a sin tax.

6. Estate and Gift Taxes
Estate Tax- levied on the assets of someone who dies.
Inheritance tax- tax on the portion inherited by an heir.
Most states levy inheritance taxes, not estate taxes.
Gift tax- Tax on gift given to someone not your spouse over $14,000 dollars.

7. Other Taxes Custom duties- taxes on imports
Interest- charges from borrowing money for loans.
Canal tolls, passport fees copyright patents, etc.

8. Expenditures Money that is spent on government programs
Medicare, Medicaid and Social Security take up a lot of the federal budget for spending. DHHS spends more money than any other agency- $1.2 trillion in 2017!
Entitlements- benefits federal law says must be paid to all who meet eligibility requirements.

9. Public Debt
Public debt vs. GDP- for every dollar generated in GDP, the debt is $1.03
Public debt is at $20.6 trillion
Interest payments on the debt are $475 billion dollars for FY 2017
Controllable Spending- spending on national parks, highway projects, etc.
Uncontrollable spending- entitlement programs.  Cannot control the number of citizens meeting eligibility requirements.

10. Budget Process The President initiates the budget process
The president submits a budget to Congress at the beginning of the yearly session
The process of making the budget starts 18 months before submission.
Federal agencies prepare spending plans, and submit them to the OMB.  Agencies must defend their requests at hearings.
Revised numbers (usually lower) are then put into the budget

11. Budget process
The President's proposals are then submitted to the Budget Committee in the House and the Senate.
The budget is then studied with the help of the Congressional Budget Office (CBO). the CBO gives numbers independent of the OMB
Tax measures are sent to the House's Ways and Means Committee and the Senate's Finance Committee.  These committees hold hearings on the budget's proposals

12. Budget process Lobbyists are involved
Both Houses propose a concurrent resolution that must be passed by May 15
A second budget resolution must be passed by Sept. 15.  By this time no appropriation measures can exceed the proposed budget.
Congress passes 13 appropriation bills per year, all which must be passed by October 1.

13. Budget process Congress rarely meets these deadlines.
To avoid a government shutdown, a continuing resolution must be passed, allowing agencies to still function based on the previous year's appropriation amount
Most recent shutdowns: 1995, 2013