The document discusses different types of taxes paid by Americans and how tax revenue is used by the federal government. It describes major tax types like income tax, corporate tax, payroll taxes, excise taxes, estate and gift taxes, customs duties, and sales taxes. It also discusses how tax revenue is spent on government programs and services, how the federal budget is created, and what happens when costs exceed tax revenue through cutting spending, raising taxes, or increasing the national debt.

1. • “ In this world, nothing can
be said to be certain, except
death and taxes.” Benjamin Franklin

2. • “Death and taxes may be
certain, but we don’t have to
die every year.” anonymous

3. Taxes?
• What types/kind of taxes do American
pay?

4. What are Taxes Used for…?

5. Financing Government
• Objectives: SWBAT -
• Understand how the Federal Government raises
money
• Differentiate between the various types of
federal/state/local taxes
• Determine why the government must borrow
money
• Discover how the federal Government spends
money
• Explain how the President and Congress
prepare the federal budget

6. The Power to Tax
• Congress uses this power to pay for
government’s expenses
• Regulate things government thinks are
dangerous

7. Individual/Personal Income Tax
• Tax on “earnings”
• Direct tax
• Progressive tax
• Brings in the largest amount of $ to the
federal gov’t
Tax Chart 2015

8. Tax Return
• April 15th
• Income – W2 form, interest – 1099,
Winnings, profit from sale, gifts, etc.
• Exemptions - credits for certain people
• Deductions – expenses not taxed,
charities, interest in mortgages
• IRS – processes tax returns

9. Corporate Income Tax
• Tax on business profits
• Progressive tax
• Non profit organizations and charities are
not taxed

10. Social Insurances taxes
• Three important programs
– Social Security
– Medicare
– Unemployment
– Paid by both employer and employee
– Regressive taxes – same rate

11. Excise Taxes
• Indirect tax the gov’t puts on the making,
selling , or using of certain goods and
services
• Gas, telephone services, cable, beer
• Tax built into the price

12. Estate and Gift Taxes
• Estate – on the property and $ of a person
who has died
• Gift – a tax on gifts over 14,000

13. Custom Duties
• Taxes on goods brought in to this country
• Tax on goods above a certain threshold

14. Sales Taxes
• taxes placed on the sale or lease of goods
and services in the United States.
– Can be
» National
» State
» Local
» Pa 6%
» Phila 2%

15. Non Revenue Taxes
• To regulate harmful activities
• “Sin taxes” (alcohol, cigarettes, smokeless
tobacco, gas guzzlers)

16. Non-Tax Revenue and Borrowing
• Fees for passports, court fines, sale of
property, etc.
• Borrow to cover additional costs
– Wars, big projects, pay deficit

17. Public Debt
• Also called the national debt
– Amount borrowed but not yet paid back
– Includes interest
– Deficit spending – borrowing to meet
expenses
Debt Clock

18. Spending and the Budget
• Budget – plan for income and expenses
– Entitlement programs – paying to people who
meet certain requirements
• Largest area of spending
• Social Security. Medicare, food stamps,
unemployment
– Interest on national debt
– Defenses spending

20. Controllable vs. Uncontrollable
Spending
• Controllable – Congress and the President
can raise or lower
• Uncontrollable – gov’t must spend
because it promised it will do so.
(Entitlements – Social Security, welfare)
• Most government spending is
uncontrollable

21. Federal Budget
• Government’s yearly plan for spending
• President and Congress work on the
budget
• President and OMB (Office of
Management and the Budget) put budget
together
• Congress studies and decides on
spending limits

22. What Happens When The Costs of
Government Exceed Revenue?
• 1.?
• 2.?
• 3?

23. What Happens When The Costs of
Government Exceed Revenue?
• 1. Cut expenses; cut government
programs; cut spending
• 2.?
• 3?

24. What Happens When The Costs of
Government Exceed Revenue?
• 1. Cut expenses; cut government
programs; cut spending
• 2. Raise taxes
• 3?

25. What Happens When The Costs of
Government Exceed Revenue?
• 1. Cut expenses; cut government
programs; cut spending
• 2. Raise taxes
• 3. Borrow more money let future
generations pay back