Chapter 16

Government Spends, Collects, and Owes

Functions of Government

1) Provides for Public Good- Nat’l Defense- Parks and the Arts- Combating Socially Undesirable Acts

2) Redistribution of Income- Social Programs (Social Security, Medicare)- Public Assistance (Welfare, Medicaid)

3) Regulating Economic Activity- Labor/Mgmt.- Environmental

4) Ensuring Economic Stability

Federal Government Spending

The Budget

Budget Surplus – Take in more $ than is needed.

Budget Deficit – Spend more $ than you have.

Deficit Financing - Borrowing $ to balance the budget

National Debt – Accumulation of overspending

Taxes

Lifetime Earnings: 40 yrs @ $60,000/yr. = $2,400,000

@ 28% Income Tax = $672,000 or $16,800/yr. @ 40% All Taxes = $960,000 or $24,000/yr.

Principles of Taxation

1) Benefits Received – Those who use it should support it.

2) Ability to Pay – Pay according to your ability

Forms of Taxation

Proportional – Flat Tax

Progressive - Tax payment increases more with increased earnings.

Regressive – Tax % goes down as you make more

Living in Allen, Texas

Avg Home = $206,000Taxing Base = 2,060

Collin County .2450 $ 505Allen City .5570 $ 1,147Allen ISD 1.5500 $ 3,193CCCCD .086984 $ 180

$ 5,025

Rate/$100