1. Warm-Up
Warm-Up: Do you think the wealthy or the poor pay a higher percentage of their income in taxes? How much do you think each group SHOULD be paying? Why?

2. Fiscal Policy How the government raises and spends its money
The government’s ability to raise taxes
The government’s ability to spend money
How does this differ from
monetary policy?

3. Three Major Types of Taxes
Progressive Tax - A tax that takes a larger percentage of income from high-income groups than from low-income groups. Regressive - A tax that takes a larger percentage of income from low-income groups than from high-income groups. Proportional - A tax that takes the same percentage of income from all income groups.

5. Tax Matching
For the types of taxes to the right (and on the next slide) decide whether they are:
Progressive
B. Regressive
C. Proportional
1. Property
2. Sales
3. Income
4. Estate
5. Excise (or Sin)
6. Occupational
1. Regressive
2. Regressive
3. Progressive
4. Progressive
5. Proportional (but also regressive)
6. Proportional

6. Property Tax
A tax on real estate that is calculated by local government and paid by the property’s owner
This is a regressive tax. The poor spend more on housing as percentage of income than do the rich.

7. Sales Tax
Sales taxes are levied at the time of sale. In Durham, they are 7.5% across the board.
This is a regressive tax. Again, it takes a larger proportion of income from the poor than the rich.

8. Income Tax
This tax is levied against someone’s income and profits each year. This tax is paid at the federal and state levels.
This is a progressive tax – as incomes increase, so does the percentage of income that is due in taxes.

9. Estate Tax
This is a tax levied on the value of someone’s assets (their estate) of a dead person.
This is another progressive tax. As the worth of the deceased person’s assets go up, the more it is taxed.

10. Excise (Sin) Tax
These are special taxes placed on specific goods that the government wants to discourage us from using.
This is a regressive tax, since the poor will spend a higher percentage of their income on these types of goods.

11. Occupational Taxes
The cost of doing business. These are various fees businesses pay to continue functioning.
There are local taxes that stay the same no matter what the business’s income is.
These are proportional taxes.

13. 2016 Income Tax Brackets
Rate Single Filers Married Joint Filers Head of Household Filers
10% $0 to $9,275 $0 to $18,550 $0 to $13,250
15% $9,275 to $37,650 $18,550 to $75,300 $13,250 to $50,400
25% $37,650 to $91,150 $75,300 to $151,900 $50,400 to $130,150
28% $91,150 to $190,150 $151,900 to $231,450 $130,150 to $210,800
33% $190,150 to $413,350 $231,450 to $413,350 $210,800 to $413,300
35% $413,350 to $415,050 $413,350 to $466,950 $413,350 to $441,000
39.6% $415,050+ $466,950+ $441,000+

14. Mandatory vs Discretionary Spending
Mandatory Social Security Medicare (Together, almost $1 trillion) Interest on public debt
Discretionary Military – $700 B Medicaid - $450 B Education, Housing & Urban Development, Environmental Protection Agency, Labor

16. Debt vs. Deficit
The Federal DEFICIT is the difference between what the government takes in (taxes and revenues) and what the government spends (mandatory and discretionary)
The Federal DEBT is the accumulation of all the federal deficits over the years

17. The Deficit for 2016: _________ The Debt as of 2016: $20.5 trillion
Debt vs. Deficit
For 2016, the U.S. Budget was:
Total Revenues: $2.99 trillion
Total Spending: $3.54 trillion
The Deficit for 2016: _________
The Debt as of 2016: $20.5 trillion

18. People’s Pie