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Published byMelvin Carter Modified over 9 years ago
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Taxes and Spending
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The National Budget Federal government keeps track of how money is spent over a period of time using a budget … called the national budget.
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Money Available = Revenue Revenue
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Budgets A budget is balanced when revenues equal expenditures. Deficit = spend more money than you make Government spends more money than they have…they must borrow to spend = deficit spending Surplus = money left over after all expenses are paid
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Fiscal Policy Policy about spending and taxation Based on deficit and surplus
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Where does the government’s money go? Defense FBI: investigate federal crimes (Dept. of Justice) DEA: stop illegal drugs from entering the U.S. ATF: enforce federal laws dealing with alcohol, tobacco, firearms, explosives and arson
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Where does the government’s money go? Entitlement programs (provide individuals with financial benefits) Dept. of Health and Human Services Protect the health and safety of Americans and provide human services
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Dept of Health & Human Services Agencies CDC-protect nation’s health and conduct medical research Medicare-look after the health of elderly Americans or those with special situations (65+) Medicaid- look after health of low-income citizens Social Security- provides monthly benefits to retired and disabled workers (65 +)
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Department of Transportation Set regulations for all public carriers Planes, trains, automobiles, highways, ferry systems National Transportation Safety Board (NTSB) Ensure transportation system meets acceptable safety standards
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National Security CIA-deal with threats from foreign countries Dept. of Homeland Security- fight terrorism Patriot Act FEMA: assist with disaster relief U.S. Citizenship and Immigration Services Control immigration and naturalization (process by which aliens become citizens)
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To spend money… the government must have money. How does the government make money?
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Sources of Revenue Taxes Income tax: takes a % of person’s/ company’s earned income Determined by tax return (filed annually to show earnings and deductions) Progressive taxation- higher a person’s earnings, the higher the rate of taxation Regressive taxation- higher rate of taxation the poorer a person is Proportional taxation- all taxpayers pay the same % no matter their income
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Excise tax- charged on the production and consumption of particular goods and services (ex. telephone and gasoline) Estate tax – paid on the transfer of property through inheritance Property is not taxed Corporate tax- levied on a company’s earnings and its payroll
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Other sources of revenue Tariffs- paid on imports Fines- penalties levied against individuals (ex. Pollution) Government bonds- government-issued certificates purchased by an individual or corporation Allows gov’ts to borrow money on the promise to repay
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