1. Taxes & Government Budget
Budget deficits & debt

2. 3 Types of Taxes Progressive- Regressive- Flat
Higher % as income rises
Example: Federal Income Taxes
Regressive-
Consumes larger % of lower income worker’s salary
Example: Gasoline Tax, Bridge Tax
Flat
Same % for everyone
Example: Sales Tax

3. Federal Gov’t Taxes Federal Income Tax Social Security Tax-
Progressive Tax: tax rate increases as income increases
Social Security Tax-
6.2% of salary on first $110,000 income
Your employer also pays 6.2%!!
Benefit: Receive monthly Gov’t pension starting at 65 (or older)
Medicare Tax
1.45% of entire salary
Why: Gov’t health insurance starting at 65

4. 2013 Federal Tax Rate Brackets Bush Tax cuts are now permanent
Single
Married filing Jointly or Qualifying Widow(er)
10%
Up to $8,925
Up to $17,850
15%
$8,926 – $36,250
$17,851 – $72,500
25%
$36,251 – $87,850
$72,501 – $146,400
28%
$87,851 – $183,250
$146,401 – $223,050
33%
$183,251 – $398,350
$223,051 – $398,350
35%
$398,351 – $400,000
$398,351 – $450,000
39.6%
$400,001 +
$450,001 +
Standard Deduction
$6,100
$12,200
Bush Tax cuts are now permanent
New top bracket

5. New Tax Rates with higher standard deduction & reduced tax write offs

6. The Government Budget Government Revenue Government Spending
All Gov’t Expenses
Taxes

7. 2014 Budget Summary Spending: $3.651 Trillion dollars
2019 Proposed Numbers
Spending: $3.651 Trillion dollars
Revenue: $3.002Trillion (from taxes)
Deficit: $649 Billion
Debt: $21.6 Trillion (2018)
$4.4 Trillion
$3.4 Trillion
$950 Billion
$22.6 Trillion

8. Budget Handout

9. Government Spending Social Security 22.0% Medicare 14.0% Medicaid 7.0%
Interest on Debt 6.0%
Defense Spending %
Homeland Security 1.0%
Education %
Other
Total %
46% of Budget
24% of Budget

10. THANK
YOU!

11. US Demographic Problem!
America’s population is aging
Babyboomers beginning to retire
average life span has risen
By in 4 Americans will be over 65
Millennial’s birthrate is very low
Demographics ensures entitlement spending will increase at a rapidly growing rate!
Projected to rise from 46% => 70% of Budget by 2040

12. Not Enough Workers? The ratio of workers to retirees is falling
This means less money coming in => more going out

13. Politicians & Entitlements

14. Growth of Entitlements.
1964 .
1984
2004* 9%
19%
Defense
Social Security
Medicare & Medicaid
Net interest
All other spending
*Current services estimate.
Source: Budget of the United States Government, FY 2005, Office of Management and Budget.

15. Entitlement Reform? .

16. Balancing the Budget?
“The only real question” is whether adjustments to taxes and spending
will come from a “careful and deliberative process” or from a “rapid
and painful response to a looming or actual fiscal crisis,”
Ben Bernanke
2010

17. Deficit & Debt relative to GDP
Current Deficit = $649 Billion (2016 numbers)
Current Debt = $20.4 Trillion
Current GDP = $19.0 Trillion
Deficit as % of GDP = 3.4% of GDP
Highest since World War II
Recent high (1983) 6% of GDP
Debt as % of GDP =107.0% of GDP
Highest ever (1946) was 120% of GDP

18. NATIONAL DEBT AS % OF GDP
20.4Trillion
GDP
19.0Trillion
107 % GDP .
WWII = 125%