7c sources of govt revenue


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7c sources of govt revenue

  1. 1. 7C SOURCES OF GOV’TREVENUE8A GOODS/SERVICESPROVIDED BY THE GOV’T8E TAXES FUND GOV’TSERVICES EPF7 demonstrate knowledge of how monetary and fiscal policy influence employment, output and prices EPF8 demonstrate knowledge of the role of govt in a market economy
  2. 2. Sources of Gov’t Revenue Federal, state, and local governments collect taxes and fees to pay for the goods and services they provide.
  3. 3. What is the source of revenuefor local governments?
  4. 4. Local Gov’t Revenue Source Most local governments depend primarily on property taxes.
  5. 5. What is the source ofrevenues for stategovernments?
  6. 6. State Gov’t Revenue Source Most state governments depend on sales and income taxes.
  7. 7. What is the source of revenue forthe federal government?
  8. 8. Federal Gov’t Revenue Source The federal government gets the largest percentage of its revenue from individual income taxes. Other sources include :  payroll taxes for Social Security and Medicare programs (i.e., Federal Insurance Contributions Act – FICA)  corporate income taxes  excise taxes (e.g., tax on cigarettes and alcohol)  fees (e.g., park entrance fees)  tariffs (i.e., taxes on certain imports, such as steel and sugar, for the purpose of protecting domestic
  9. 9. Goods/Services provided bygov’t Governments may provide an alternative method to supply goods and services when the benefits to society of doing so outweigh the costs to society.
  10. 10. What are some of the goods andservices provided by thegovernment?
  11. 11. Goods and Services Provided ByThe Gov’tThe government provides goods and services such as  military protection  street lights  police protection
  12. 12. What are these goods andservices not provided by theprivate market?
  13. 13. Why not provided by private market? Though schools, roads, and fire protection can be provided by the private sector, the government generally provides them as these services benefit society as a whole.  An educated public benefits the whole society.  Roads facilitate trade.  If one person’s house burns and the fire department refuses to come due to nonpayment, neighboring houses may also catch fire. These goods and services may not be provided by the private sector because it would not be profitable for them to do so when non payers
  14. 14. Taxes & fees fund gov’tservices Governments pay for the goods and services they provide by taxing or borrowing from people.
  15. 15. What types of goods and servicesdoes the federal gov’t provide,and what are the sources of itsrevenue?
  16. 16. Federal Spending & RevenuesThe bulk of federal spending goes toward  national defense  payments to Social Security recipients  the costs of goods and services, medical expenditures (i.e., Medicare and Medicaid)  interest payments on the national debt.Most federal tax revenue comes from federal income tax and payroll taxes.
  17. 17. What types of goods and services dothe state and local gov’tsprovide, and what are their sources ofrevenue?
  18. 18. State & Local Gov’t Spending &Revenues The bulk of state and local government revenue is spent on  public education  public welfare,  road construction and repair  public safety Most state and local government revenues come from  sales taxes  grants from the federal government  personal income taxes  property taxes