TAXESTAXES

Tax BasicsTax Basics

Tax - money citizens pay to fund the gov’t for the public good

LIMITS: Can only be used for public use Can’t tax exports Direct taxes have to be spread evenly

throughout the states Federal gov’t can’t tax state gov’ts

Tax - money citizens pay to fund the gov’t for the public good

LIMITS: Can only be used for public use Can’t tax exports Direct taxes have to be spread evenly

throughout the states Federal gov’t can’t tax state gov’ts

Direct tax - a tax paid straight to the gov’t Indirect tax - a tax paid to a company who

pays it to the gov’t

---------- Progressive tax - the more money you make,

the more taxes you pay Flat tax - everyone pays the same tax rate

Direct tax - a tax paid straight to the gov’t Indirect tax - a tax paid to a company who

pays it to the gov’t

---------- Progressive tax - the more money you make,

the more taxes you pay Flat tax - everyone pays the same tax rate

Income TaxIncome Tax

A tax based on how much money you make a year

Paid to the IRS Most people have it taken out of their

paychecks every month

A tax based on how much money you make a year

Paid to the IRS Most people have it taken out of their

paychecks every month

Payroll TaxPayroll Tax

Taxes that employers are required to take out of your paycheck every month For social security, Medicare, etc.

Taxes that employers are required to take out of your paycheck every month For social security, Medicare, etc.

Other Types of TaxesOther Types of Taxes

Excise tax - a tax on the production and selling of goods (ex: oil, gasoline, alcohol, tobacco, etc.)

Gift tax - taxes paid on gifts or prize winnings

Estate tax - taxes on the belongings of someone who has died

Excise tax - a tax on the production and selling of goods (ex: oil, gasoline, alcohol, tobacco, etc.)

Gift tax - taxes paid on gifts or prize winnings

Estate tax - taxes on the belongings of someone who has died

Stupid Things the Gov’t Wastes Our Tax Money On (2012)Stupid Things the Gov’t Wastes Our Tax Money On (2012) Military beef jerky: $700,000 Robot squirrel built to see how a snake would react to

it: $325,000 Research for best astronaut food on Mars: $1 million Research to help golfers putt better using their

imagination to envision a bigger hole: $350,000

Moroccan pottery classes: $27 million Making pennies (costs 2 cents per penny): $70 million Free Gov’t cell phones: $1.5 billion Helping Russia hire Russians to make Russian

Weapons: $15 million

Military beef jerky: $700,000 Robot squirrel built to see how a snake would react to

it: $325,000 Research for best astronaut food on Mars: $1 million Research to help golfers putt better using their

imagination to envision a bigger hole: $350,000

Moroccan pottery classes: $27 million Making pennies (costs 2 cents per penny): $70 million Free Gov’t cell phones: $1.5 billion Helping Russia hire Russians to make Russian

Weapons: $15 million

“Prom Week” - a videodeveloped by the gov’t to reliveyour prom night: $516,000

Talking Urinal disks: $10,000

More Stupid Spending…More Stupid Spending…

A musical about global warming: $697,177 Refunds for tax fraud criminals: $3.9 billion Athletes’ overseas vacations: $5.5 million Research on fruit flies: $939,771 Research on what it means to be happy:

$24,995 Research asking if old people should play

World of Warcraft: $1.2 million

A musical about global warming: $697,177 Refunds for tax fraud criminals: $3.9 billion Athletes’ overseas vacations: $5.5 million Research on fruit flies: $939,771 Research on what it means to be happy:

$24,995 Research asking if old people should play

World of Warcraft: $1.2 million

Daily Spending SnapshotDaily Spending Snapshot

Dept. of Health and Human Services: $3 billion a day

Social Security: $2.5 billion a day Dept. of Defense: $1.8 billion a day

Dept. of Health and Human Services: $3 billion a day

Social Security: $2.5 billion a day Dept. of Defense: $1.8 billion a day

Government BorrowingGovernment Borrowing

Surplus - spending LESS money than what you earn (ex: you make $100 but only spend $10 of it)

Deficit - spending MORE money than what you earn (ex: you make $100 and spend $10,000 of it)

Interest - an extra charge for extra time to pay off a debt

Surplus - spending LESS money than what you earn (ex: you make $100 but only spend $10 of it)

Deficit - spending MORE money than what you earn (ex: you make $100 and spend $10,000 of it)

Interest - an extra charge for extra time to pay off a debt

Deficit Financing - spending all the money you make, then borrowing the rest

Public debt - all the money the gov’t owes

(current public debt: $17.1 trillion)

- the U.S. borrows 46 cents per dollar spent- The federal gov’t borrows $40,000 a second

Deficit Financing - spending all the money you make, then borrowing the rest

Public debt - all the money the gov’t owes

(current public debt: $17.1 trillion)

- the U.S. borrows 46 cents per dollar spent- The federal gov’t borrows $40,000 a second

Gov’t SpendingGov’t Spending

Entitlements - benefits the gov’t must give to the people who qualify for them

Ex: Medicare, Social

Security, welfare/food stamps, etc.

about 80% of gov’t

spending is uncontrollable

Entitlements - benefits the gov’t must give to the people who qualify for them

Ex: Medicare, Social

Security, welfare/food stamps, etc.

about 80% of gov’t

spending is uncontrollable

The Federal BudgetThe Federal Budget

Budget - a plan for how you will spend your $

Fiscal Year - the year during which the federal budget will be spent (fiscal = finance, money)

The President and Congress work together to come up with the federal budget every year

Budget - a plan for how you will spend your $

Fiscal Year - the year during which the federal budget will be spent (fiscal = finance, money)

The President and Congress work together to come up with the federal budget every year

Budget ProcessBudget Process

NO MONEY can be spent in gov’t unless Congress makes a law about it

Process: 1.) The President (with help from his EOP)

comes up with a plan for a budget 2.) He proposes his budget to Congress 3.) Budget goes to committees in Congress 4.) Budget made into bills to be passed by

House and Senate

NO MONEY can be spent in gov’t unless Congress makes a law about it

Process: 1.) The President (with help from his EOP)

comes up with a plan for a budget 2.) He proposes his budget to Congress 3.) Budget goes to committees in Congress 4.) Budget made into bills to be passed by

House and Senate

BUDGET HELP!BUDGET HELP!

The federal gov’t has entrusted your group with $10,000,000,000 to spend for the country. How much money would you spend per executive department? Why?

Is there a way your group can make these programs more efficient to cut down our national debt?

The federal gov’t has entrusted your group with $10,000,000,000 to spend for the country. How much money would you spend per executive department? Why?

Is there a way your group can make these programs more efficient to cut down our national debt?

Taxes Excise tax Payroll tax Income tax Gift tax

Taxes Excise tax Payroll tax Income tax Gift tax

Estate tax Surplus Deficit Deficit financing interest

Estate tax Surplus Deficit Deficit financing interest