1. Turn to p. 694-695 and complete numbers 1-13

2. “Taxes and Budget”

3. A. Art. I, Sec.8, Clause 1- First power given Congress 1. “power of the purse” 2. Used to run government

12. B. Limitations 1. No taxes on churches (1st Amendment) 2. Taxes used for public purposes only

13. C. Early Taxes 1. Duties, tax on goods coming in to country, main source of gov’t money for early America 2. Direct tax- states were taxed based on population (3/5 compromise included slaves) 3. Indirect tax- on goods (liquor tax)

14. 1. Do you think our progressive tax system is fair? Why or why not? 2. Do you think that poor people are not paying enough taxes or do you think the rich need to pay more of their share? 3. Do you think the government does too much or too little in helping the poor of this country? Single Taxable income is over But not over The tax isPlus Of the amount over $08,500$0.0010%$0 8,50034,500850.0015%8,500 34,50083,6004,750.0025%34,500 83,600174,40017,025.0028%83,600 174,400379,15042,449.0033%174,400 379,150 110,016.5035%379,150

15. A. Income tax 1. Allowed by 16th Amendment 2. Progressive income tax- percentage paid goes up with income (determined by “brackets”) 1992 1993- 2000 2001 2002 2003- 2011 15% 10% $0 to $8000 15% to $32500 28% 27.5%27%25% to $79000 31% 30.5%30%28% to $165000 36%35.5%35%33% to $358000 39.6%39.1%38.6%35% and above

18. 3. Corporate income tax- extra tax on corporation profits 4. Capital gains taxes- on stock market profits

19. B. Payroll taxes 1. Social Security- Money for retired and disabled 2. Medicare- healthcare for elderly

24. C. Other 1. Excise Taxes- taxes on goods and services a. Regressive taxes- percentage you pay goes down the more money you make b. Ex: gasoline, tobacco, telephone 2. Estate tax- tax on inheritances, but gifts up to $12000 are tax free

25. Write a paragraph about one of the following two topics using p. 678-680: 1. Describe the progressive tax system. If you could make changes on that or any other tax, what would it be? 2. Look at the breakdown of the Federal Budget. If you could adjust the budget in any way, what would it be? Would you try to balance the budget? What programs would you increase/decrease?

26. A. President submits 1. Office of Management and Budget (OMB) 2. Huge political statement about priorities of gov’t

27. B. Congress passes 1. Current annual budget is near $4 trillion 2. Mandatory spending- money that does not need to be renewed each year a. ex: social security, debt payments 3. Discretionary spending­- parts of budget that can be raised or lowered a. ex: EPA, education spending

30. C. Budget breakdown 1. entitlement programs (social security, Medicare, welfare): ~50% of budget 2. defense- 21%, interest on debt 9%

32. D. Borrowing 1. Deficit- spending above revenue ($1.5 trillion) 2. total debt: $14 trillion, >$250 billion in interest

36. “Government Bureaucracy”

37. A. Bureaucracy- large, complex administrative structure that handles everyday business B. Hierarchical authority, job specialization, formalized rules, professional C. Civil service- 1. lower level government employees 2. take a test 3. Not political

38. 1. In the early days of the American Republic, what was the main source of government revenue? 2. What is a progressive tax? What is the current main source of government revenue? 3. What are the two other kinds of payroll taxes? 4. Why are sales or excise taxes considered regressive? 5. What is the difference between discretionary and mandatory spending? Give an example of each. 6. What makes the biggest portion of the federal budget? 7. What is the process of getting the budget approved?

39. D. Organized under the executive branch- President is the chief administrator, appoints high level positions

40. A. Executive Office of President 1. President’s closest advisors (his Administration) 2. Work in the White House, led by the Chief of Staff

41. 3. National Security Council- advise the pres. on security issues a. National Security advisor, VP, CIA director, Sec. of State, Sec of Defense

42. B. Executive Departments 1. Cabinet- advisors and head of departments (15) a. Appointed by the President, confirmed by the Senate b. Ex: Department /Secretary of Homeland Security c. Department of Justice (Attorney General) 2. Others: OMB, UN Ambassador

43. C. Independent Agencies 1. Independent Executive Agencies- president appoints but operate independently a. Federal Emergency Management Administration (FEMA), NASA, Environmental Protection Agency (EPA), Internal Revenue Service (IRS), Peace Corps

44. 2. Independent Regulatory Commissions- independently regulate aspects of economy a. Securities and Exchange Commission (SEC), National Labor Relations Board (NLRB), BBB, FDA

45. 3. Government corporations- government-owned enterprise that provides a service that could be done by the private sector a. US Postal Service (USPS), Tennessee Valley Authority (TVA), Fannie Mae, Freddie Mac

46. D. Other Examples 1. Transportation Security Administration (TSA) 2. Federal Bureau of Investigation (FBI) 3. National Security Agency (NSA) 4. Drug Enforcement Agency (DEA) 5. Alcohol, Tobacco, and Firearms (ATF) 6. Central Intelligence Agency (CIA)

47. 7. Center for Disease Control (CDC) 8. Better Business Bureau (BBB) 9. National Transportation Safety Board (NTSB) 10. Occupational Safety and Health Administration (OSHA) 11. Food and Drug Administration (FDA) 12. Federal Communications Commission (FCC)