Turn to p. 694-695 and complete numbers 1-13

“Taxes and Budget”

A. Art. I, Sec.8, Clause 1- First power given Congress

1. “power of the purse”2. Used to run government

B. Limitations1. No taxes on churches (1st Amendment)2. Taxes used for public purposes only

C. Early Taxes1. Duties, tax on goods coming in to country, main

source of gov’t money for early America2. Direct tax- states were taxed based on

population (3/5 compromise included slaves)3. Indirect tax- on goods (liquor tax)

1. Do you think our progressive tax system is fair? Why or why not?

2. Do you think that poor people are not paying enough taxes or do you think the rich need to pay more of their share?

3. Do you think the government does too much or too little in helping the poor of this country?

Single

Taxable income is over

But not over

The tax is

PlusOf the

amount over

$0 8,500 $0.00 10% $0

8,500 34,500 850.00 15% 8,500

34,500 83,600 4,750.00 25% 34,500

83,600 174,400 17,025.00 28% 83,600

174,400 379,150 42,449.00 33% 174,400

379,150  110,016.5

035% 379,150

A. Income tax1. Allowed by 16th

Amendment2. Progressive

income tax- percentage paid goes up with income (determined by “brackets”)

  1992 

1993-2000

  2001

  2002 

2003-2011

15% 15% 15%10% 10%

$0 to $8000

15% 15%to

$32500

28% 28% 27.5% 27% 25%to

$79000

31%

31% 30.5% 30% 28%to

$165000

36% 35.5% 35% 33%to

$358000

39.6% 39.1% 38.6% 35%and

above

3. Corporate income tax- extra tax on corporation profits

4. Capital gains taxes- on stock market profits

B. Payroll taxes1. Social Security- Money for retired and disabled2. Medicare- healthcare for elderly

C. Other1. Excise Taxes- taxes on goods and services

a. Regressive taxes- percentage you pay goes down the more money you make

b. Ex: gasoline, tobacco, telephone

2. Estate tax- tax on inheritances, but gifts up to $12000 are tax free

Write a paragraph about one of the following two topics using p. 678-680:

1.Describe the progressive tax system. If you could make changes on that or any other tax, what would it be?

2.Look at the breakdown of the Federal Budget. If you could adjust the budget in any way, what would it be? Would you try to balance the budget? What programs would you increase/decrease?

A. President submits1. Office of

Management and Budget (OMB)

2. Huge political statement about priorities of gov’t

B. Congress passes1. Current annual budget is

near $4 trillion2. Mandatory spending-

money that does not need to be renewed each yeara. ex: social security, debt

payments

3. Discretionary spending - parts of budget that can be raised or lowereda. ex: EPA, education

spending

C. Budget breakdown1. entitlement programs (social security,

Medicare, welfare): ~50% of budget2. defense- 21%, interest on debt 9%

D. Borrowing1. Deficit- spending above revenue ($1.5 trillion)2. total debt: $14 trillion, >$250 billion in interest

“Government Bureaucracy”

A. Bureaucracy- large, complex administrative structure that handles everyday business

B. Hierarchical authority, job specialization, formalized rules, professional

C. Civil service- 1. lower level government employees2. take a test3. Not political

Review1. In the early days of the American Republic,

what was the main source of government revenue?

2. What is a progressive tax? What is the current main source of government revenue?

3. What are the two other kinds of payroll taxes?4. Why are sales or excise taxes considered

regressive?5. What is the difference between discretionary

and mandatory spending? Give an example of each.

6. What makes the biggest portion of the federal budget?

7. What is the process of getting the budget approved?

D. Organized under the executive branch- President is the chief administrator, appoints high level positions

A. Executive Office of President1. President’s closest advisors (his

Administration)2. Work in the White House, led by the Chief of

Staff

3. National Security Council- advise the pres. on security issuesa. National Security advisor, VP, CIA director, Sec. of

State, Sec of Defense

B. Executive Departments1. Cabinet- advisors and head of departments (15)

a. Appointed by the President, confirmed by the Senate

b. Ex: Department /Secretary of Homeland Securityc. Department of Justice (Attorney General)

2. Others: OMB, UN Ambassador

C. Independent Agencies1. Independent Executive Agencies- president

appoints but operate independently a. Federal Emergency Management Administration

(FEMA), NASA, Environmental Protection Agency (EPA), Internal Revenue Service (IRS), Peace Corps

2. Independent Regulatory Commissions- independently regulate aspects of economya. Securities and Exchange Commission (SEC),

National Labor Relations Board (NLRB), BBB, FDA

3. Government corporations- government-owned enterprise that provides a service that could be done by the private sectora. US Postal Service (USPS), Tennessee Valley

Authority (TVA), Fannie Mae, Freddie Mac

D. Other Examples1. Transportation Security Administration (TSA)2. Federal Bureau of Investigation (FBI)3. National Security Agency (NSA)4. Drug Enforcement Agency (DEA)5. Alcohol, Tobacco, and Firearms (ATF)6. Central Intelligence Agency (CIA)

7. Center for Disease Control (CDC)8. Better Business Bureau (BBB)9. National Transportation Safety Board (NTSB)10. Occupational Safety and Health Administration

(OSHA)11. Food and Drug Administration (FDA)12. Federal Communications Commission (FCC)