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Taxes, Government Spending, and Borrowing

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Presentation on theme: "Taxes, Government Spending, and Borrowing"— Presentation transcript:

1 Taxes, Government Spending, and Borrowing
Fiscal Policy Taxes, Government Spending, and Borrowing

2 Fiscal Policy Definition: Use of government spending and revenue collection to influence economy Goals: Promote economic growth and stability Social policy programs with economic effects Social Security TANF (temporary assistance to needy families) Food stamps Medicare Medicaid

3 Types of Taxes Progressive Tax: Tax rate increases as income increases
x Yea: Filing Status: Progressive Tax: Tax rate increases as income increases Ex. Federal Income Tax, GA Income Tax Wealthy pay higher percentage of income Tax Bracket Single Married Filing Jointly 10% Bracket $0 – $8,375 $0 – $16,750 15% Bracket $8,375 – $34,000 $16,750 – $68,000 25% Bracket $34,000 – $82,400 $68,000 – $137,300 28% Bracket $82,400 – $171,850 $137,300 – $209,250 33% Bracket $171,850 – $373,650 $209,250 – $373,650 35% Bracket $373,650+

4 Types of Taxes Regressive Tax: Tax rate decreases as income increases
A fee of $1,000 per household Sales tax Proportional Tax: Flat tax Ex. 15% tax on all taxpayers

5 Federal Tax System Individual Income Tax (16th Amendment)
Bureaucracy: Internal Revenue Service Progressive Income Tax Federal Insurance Contributions Act FICA Social Security: 6.2% up to $106,800 Medicare: 1.45% of all earnings Employers must match payroll deductions

6 Other taxes Corporate Income Taxes
Federal: 35% State (GA): 6% Combined adjusted: 38.9% Excise Taxes (gas, tobacco, phone, alcohol, airline tickets, .) Gas: cpg; 7.5 cpg + 4% GA Cigarette: $1.01 pack; . 37 GA Estate Tax (death tax) Gift Tax Customs Duties (ex. Tariffs)

7 Federal Government Expenditures
Federal Budget: annual plan of revenues (taxes, borrowing) and spending for year 2011: $3.6 TRILLION Mandatory Spending Interest on national debt ($217 billion) Social Security ($723 billion) Medicare/Medicaid ($825 billion) Discretionary Spending Defense ($701 billion) Housing/welfare ($418 billion) Education ($127 billion)

8 Budget Terms Federal budget surplus: tax revenue is greater than spending in a year Federal budget DEFICIT: amount spending exceeds taxes in a year 2008 deficit: $459 billion 2009 deficit: $1.413 TRILLION 2010 deficit: $1.56 TRILLION 2011 deficit: $1.3 TRILLION National Debt: total amount of all past budget deficits $14.8 TRILLION

9 How Budgets are Made Step 1: President prepares the budget
OMB: Office of Management and Budget Step 2: Budget sent to Congress Step 3: Appropriations bills sent to committees in House of Representatives Step 4: Senate receives budget, may approve, modify, prepare own Step 5: Budget goes to President to sign

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