Chapter 12 PayING FOR GOVERNMENT PGS. 289 FL1 - 312

Essential QUESTION: What are the different types of taxes In America? Chapter 12 Section 1 Raising Money PGS. 294-298 Essential QUESTION: What are the different types of taxes In America?

In 2010, the federal government spent 3.5 Trillion Dollars The High Cost of Government (pgs.294-295) The bigger the population, the more it cost government to provide all of their services The Federal Budget (pg.295) In 2010, the federal government spent 3.5 Trillion Dollars 43% or about 1.5 Trillion of that was spent Social Security, Medicare, and Medicaid Those are government programs design to help the elderly, disabled, and poor The government also spends on defense and military Post 9/11 require a large increase in defense and military spending The American Government has debt from spending more than it raised over the years The American Government borrows money to make up it difference in debt Interest has to be on the money the American Government borrows Interest: payment for the use of loaned money The National Debt is American’s Government total amount of money borrow plus it’s interest National Debt: the total amount of money owed by the U.S. Government plus the interest that must be paid on this borrowed money What are the main expenses of the federal government?

The Tax System (pg.295-297) At all levels of government paying taxes is mandatory for citizens and businesses This allows governments to plan their future budgets Establishing Priorities (pg.296) Government officials must prioritize what the programs will receive funding first and the most to which ones will receive funding last and the fewest Purposes of Taxation (pg.296) The primary goal of taxing is to raise money, a.k.a. revenue Revenue: income All levels of government depend upon revenue to provide their citizens, businesses, and economy beneficial good and services Taxes also help control some activities Governments tax imported goods to help local citizens and businesses Governments tax items like cigarettes, alcohol, etc. to discourage destructive behavior

The Tax System (pg.295-297) The government tries to follow certain rules or principles when creating their tax system Ability to Pay (pg.297) People with different income levels pay a different percentage of income tax People with very low income levels do not pay Equal Application (pg.297) Similar items are tax the same rate Scheduled Payment (pg.297) Tax are paid on a set, established schedule to help steadily fund the government throughout each calendar year Late payments are charged interest and penalty fees

Other Ways to Pay for Government (pg.297-298) Governments can raise and lower taxes, fees and fines, and borrow money to cover their expenses Fees and Fines (pg.297) Governments raises billions of dollars each year through fees Fees: government charges for a service or license Governments also increases revenue through fines Fine: money paid as a penalty for breaking certain laws Governments also creates revenues by providing services Government Borrowing (pg.298) Governments borrow money when they need more to meet their expenses Governments borrow money by issuing bonds Bond: a certificate of debt issued by governments and corporations to persons from whom they have borrowed money Businesses and people purchase these government bonds with agreement that the government will pay them back by a certain date plus the agreed upon interest