1. Fiscal Policy Fiscal Policy – government policy toward taxing & spending. Federal Budget Prepared annually by the President Approved by Congress Budget Year – October 1 – September 30 Government Spending Mandatory Spending – does not need annual approval. Discretionary Spending – needs annual approval. Types of Taxation Progressive Tax – tax that takes a larger percentage from the wealthy Regressive Tax – tax that takes a larger percentage from lower incomes Proportional Tax – tax that takes the same percentage from all incomes.

2. GOVERNMENT BUDGET Government Revenue - $ that government has to operate. Taxes, fines, user fees, etc… Government Expenditures - $ the government must spend on programs it operates. Balanced Budget – Revenue = Expenditures Budget Surplus - Revenue > Expenditures Budget Deficit - Revenue < Expenditures National Debt – Accumulation of Budget Deficits

3. Federal Government Revenue Federal Taxes Income Tax - #1 source of government revenue. Progressive tax on individual earning. Payroll Tax – 2 nd largest source of income Corporate Income Tax – up to 36% of profits. OTHER FEDERAL TAXES Excise Tax Estate Tax Luxury Tax Social Security Tax

4. Federal Government Expenditure Social Security – 21.2% National Defense – 17.4 % Income Security – 14% Medicare – 13.5 % Health – 10.5% Interest on Debt – 8.2% Other – 15.2 %

5. State Government Intergovernmental Revenue - $ paid from one level of government to another. States get it from the federal government. Sales Tax – Paid by retail stores to the state government. (passed onto consumers) Income Tax – taken from workers paychecks. Excise Tax – Alcohol, tobacco, & gasoline.

6. Local Government REVENUE Intergovernmental Revenue – paid by the state government to local governments. Property Tax – paid on land, houses, automobiles, etc… EXPENDITURES Education Police & Fire Protection Water Supply Sewage & Sanitation

7. FEDERAL INCOME TAX TABLE TAX RATESINGLEMARRIED 10% $0-$8,025$0-$16,050 15% $8,025-$32,550$16,050-$65,100 25% $32,550-$78,850$65,100-$131,450 28% $78,850-$164,550$131,450-$200,300 33% $164,550-$357,700$200,300-$357,700 35% Over $357,700