123 Go To Section: Current Federal Taxes Chapter 16, Section Individual Income Tax Individual income taxes regularly provide the largest source of federal revenue. The tax is levied on each person’s taxable income. Corporation Income Tax Each corporation must pay a tax on its net income, that is, on the earnings above the costs of doing business. The Income Tax The income tax is the largest source of federal revenue today. The tax is also a progressive tax, that is, the higher the income and the ability to pay, the higher the tax rate.

123 Go To Section: Year 2009 income brackets and tax rates Marginal Tax Rate [1] SingleMarried Filing Jointly or Qualified Widow(er)Married Filing SeparatelyHead of Household 10%$0 – $8,350$0 – $16,700$0 – $8,350$0 – $11,950 15%$8,351– $33,950$16,701 – $67,900$8,351 – $33,950$11,951 – $45,500 25%$33,951 – $82,250$67,901 – $137,050$33,951 – $68,525$45,501 – $117,450 28%$82,251 – $171,550$137,051 – $208,850$68,525 – $104,425$117,451 – $190,200 33%$171,551 – $372,950$208,851 – $372,950$104,426 – $186,475$190,201 - $372,950 35%$372,951+$372,951+$186,476+$372,951+

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123 Social Insurance Taxes There are three main types of social insurance taxes levied: OASDI The Old-Age, Survivors, and Disability program is the basic Social Security program. Medicare Medicare is health insurance for the elderly and part of the Social Security program. Unemployment Compensation The unemployment compensation program pays benefits to jobless workers and is also part of the overall Social Security program. Chapter 16, Section

123 Go To Section: Other Types of Taxes Excise Taxes An excise tax is a tax laid on the manufacture, sale, or consumption of goods and/or the performance of services. Custom Duties A custom duty is a tax laid on goods brought into the U.S. from abroad. Estate and Gift Taxes An estate tax is a levy imposed on the assets (estate) of one who dies. A gift tax is one imposed on the making of a gift by a living person. Chapter 16, Section

123 Go To Section: The Federal Government’s Income Federal revenue comes from several different sources: Chapter 16, Section

123 Go To Section: Chapter 16, Section Nontax Revenues and Borrowing Nontax Revenues Nontax revenues come from a variety of sources, including canal tolls; fees for passports, copyrights, and patents; interest earned; and selling philatelic stamps. Borrowing Congress has the power “[t]o borrow Money on the credit of the United States.” (Article I, Section 8, Clause 2). A deficit is the shortfall between income and spending. A surplus is more income than spending. Congress must authorize all federal borrowing.

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123 Recovery Act On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 at the urging of President Obama, who signed it into law four days later. A direct response to the economic crisis, the Recovery Act has three immediate goals: 1. Create new jobs and save existing ones. 2. Spur economic activity and invest in long-term growth. 3. Foster unprecedented levels of accountability and transparency in government spending.

123 Go To Section: The Recovery Act intends to achieve those goals by: 1. Providing $288 billion in tax cuts and benefits for millions of working families and businesses. 2. Increasing federal funds for education and health care as well as entitlement programs (such as extending unemployment benefits) by $224 billion. 3. Making $275 billion available for federal contracts, grants and loans

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