I. Taxes and Other Revenue

 Get into groups and complete the Work Sheet. Use the textbook to find the percentages.

 Explain how the Constitution gives Congress the power to tax and at the same time places limits on that power.  Identify the most significant federal taxes collected today.  Describe the nontax sources of federal revenue.

 Governments various means it uses to raise and spend money and thereby influence the nation’s economy  Simple  A cut in taxes means more money in the hands of consumers and their increased spending power means more jobs.  An increase in taxes takes money away from the consumers and so tends to slow the economy and reduce inflation.

 Constitution gives the government power to tax  Franklin  Why taxes? Raise money and regulate or discourage harmful activity  Licensing is a form of taxation – guns, drugs, hunting  Cant tax religion (1 st ) and only for debts, defense, general welfare and exports.  Applied equally to all states – only one is income tax – Civil War. Import tax  Cant tax states - fees

 “what we pay for civilized society”  Page 459 – biased paragraph?  Income tax – biggest source of revenue  Progressive tax – the higher one’s income, the higher the tax rate  Individual income tax and corporation income tax  Bush passed major tax cuts – now 10% to 35% if you make over $372,950.  Corporate – 15% if you make over 50,000 and 35% if you make more than 15 million.

 OASDI – Old age, survivors, and disability insurance (Social Security)  Medicare – healthcare for elderly  Unemployment compensation – benefits paid to jobless workers  Payroll taxes – comes out of your check. You pay 6% and your employer pays 6% - if self-employed, you pay 12%/Medicare is 1.5 and 3%  Regressive tax – tax is levied at the same rate – so poor have to pay a bigger part of their salary.  Some poor have to pay more for FICA then they do income tax

 Excise tax – sales tax, levied on gas, oil, tobacco, alcohol and such  Called hidden, luxury or sin taxes  Estate tax on assets of someone who dies – 3.5 mil  Gift tax is on a gift from on person to another - $13,000.  Custom Duties – tariffs or import tax – once the main source of revenue  Interest – FED, canal tolls, passports, patents and such