Chapter 9 – Source of Government Revenue

9-2 The Federal Tax System

CA Standards:

12.3 Students analyze the influence of the federal government on the American economy.

Objectives:

• Explain the progressive nature of the individual income tax.

• Explain the nature of FICA taxes.

• Describe the importance of the corporation tax structure.

• Identify other major sources of federal revenue.

Read pages 222 - 226Economics: Principles & PracticesPrepare for Open notebook Quiz

Write definition of key terms found on page 222 Use glossary in textbook

Key Terms page 216

Individual Income Tax

Payroll With-holding System

Internal Revenue Service

Tax Return

Indexing

FICA

Medicare

Corporate Income Tax

Excise Tax

Estate Tax

Gift Tax

The federal government collects taxes from a number of sources. The most important

revenue sources are individual income taxes, Social Security taxes, and corporate income taxes.

1. What are the three most important sources of revenue for the federal government?

- Individual income taxes

- FICA or Social Security taxes

- Corporate income taxes

2. How is the individual income tax paid in most cases?

- through payroll deductions

3. Is the individual income tax a proportional, progressive, or regressive tax?

- progressive

4. What does FICA stand for?

- Federal Insurance Contributions Act

5. What are the two components of FICA?

- Social Security

- Medicare

6. What are five other forms of federal taxation?

- Excise taxes

- Estate taxes

- Gift taxes

- Custom duties

- User fees

Be prepared for open notebook quiz