1. Taxes and Government Spending
Ch 14
Taxes and Government Spending

2. Sec 1 What are Taxes? STGs: Understand, explain, analyze, identify…
How gov’t uses taxes to pay for programs
The roots of the concept of taxation in the U.S. Constitution & the U.S. Supreme Court
Types of tax bases and structures
Characteristics of a good tax
Who bears the tax burden

3. Where does it come from?
Where does gov’t get the money to pay for programs?
Where do taxes come from?
So, in the end, who pays for the programs offered by the gov’t?

4. TAXES & The Constitution
Q: Does government have the authority to tax you? A: YES. Q: Where? A:
Source in Constitution: Article I, Section 8, Clause 1: To lay and collect taxes, imposts and excises, to pay the debts, and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.

5. Tax Bases What can be taxed? Methods: P I G S Individual income tax
Sales tax
Property tax
Corporate income tax

6. Types of Tax Structures pg 360, Figure 14.1
Type of Tax
Description
Method
Example #1
Ron’s taxes on $50,000 income
Example #2
Mary’s taxes on $150,000 income
Proportional
Flat Tax
Progressive
Income Tax
Regressive
Sales Tax

7. Characteristics of a Good Tax

8. Sec 2 Federal Taxes STGs: Understand, explain, analyze, identify…
The process of paying individual income taxes
The basic characteristics of corporate income taxes
The purpose of Social Security, Medicare and unemployment taxes
Other types of taxes

9. Withholding taxes Pay as You Go File a Tax Return Tax Bracket
How does gov’t know how much you owe for taxes? How does the process work?
Withholding taxes
Pay as You Go
File a Tax Return
Tax Bracket

10. Basic characteristics of corporate income taxes
Progressive Tax Rate
Corporations have many deductions (more than individuals) that reduce their taxable income.

11. The purpose of Social Security, Medicare and unemployment taxes
Tax/Program
Source
Purpose
Social Security
FICA – based on your income
Medicare
FICA
Unemployment Tax
Based on your income.
You can’t collect it IF you don’t pay into this fund.

12. Other types of taxes…
Type of Tax
Explanation/Example 1. 3. 4. 5.

13. Sec 3 Federal Spending STGs: Understand, explain, analyze, identify…
Difference between mandatory and discretionary spending
Major entitlement programs
Categories of discretionary spending
Impact of federal aid to state and local governments

14. Difference between mandatory and discretionary spending
Spending Type
Define
Examples (Pg 371, Figure 14.6) List all
Mandatory Spending
Discretionary Spending
Which one is Required?

15. Major entitlement programs – Pg 372
Are these Discretionary or Mandatory?
Why are such programs called “Entitlement Programs”?
Entitlement Programs are “Means-Tested”.
What does that mean?
Can these types of programs be cut easily? Why or why not?

16. Categories of Discretionary Spending
Pg 371, Figure 14.6 is outdated. Go Online to update the numbers.
Use Federal Spending 2017 by Congressional Budget Office
President Trump's Proposed 2018 Budget
List the 3 largest types/categories of Discretionary Spending

17. Sec 4 State and Local Taxes & Spending
STGs: Understand, explain, analyze, identify…
How states use a budget to plan spending
What part of the budget must be balanced? Capital Budget or Operating Budget?
Where state taxes are spent
The major sources of state tax revenue
Local government spending and sources of revenue

18. Impact of federal aid to state and local governments
List 6 areas/programs where State Gov’ts receive aid/money from the Federal Gov’t:

19. How states use a budget to plan spending
Budget Type
EExplanation
Operating Budget
Capital Budget

20. Where state taxes are spent California Budget

21. LOCAL GOV’T REVENUE SOURCES AND SPENDING
Use the pie chart on prior slide to fill in the lines below. (Pg 379 Pie charts)
LOCAL GOV’T REVENUE SOURCES AND SPENDING
REVENUE SOURCES (Left Pie Chart)
SPENDING (Right Pie Chart)

22. State Tax Revenue What CAN’T be taxed? What IS taxed? S State I C
Other:
Savings accounts
Inheritance
Car Registration
Dog License AND MORE

23. Reminder
Write the Answers for: STGs Assessment Questions Fill in details