1. Our Government What does our Government do anyway?

2. 1. Taxes Fund Public Goods and Services National Defense State and Local Police Financial Aid Health Care for Elderly Public Education Social Services

3. 2. Regulates Business Activity Monopoly and Legal Monopolies Protects Consumers-Agencies 3. Redistributes Income

4. Agencies-Enforce the Laws USDA (Department of Agriculture) Consumer Product Safety Commission Fair Package and Labeling Act Food, Drug, and Cosmetic Act Child Protection and Toy Safety Act Companies that break these laws are penalized!

5. OK, how does the Gov. pay for all this? TAXES!!!

6. American Revolution caused debt The Power to Collect Taxes Tax was necessary to pay debt Article 1, Section 8 of the U.S. Constitution granted Congress power to tax

7. Cooking Oil, Foreigners, Slaves (Ancient Egypt) Early Taxes Sales, Inheritance, Imports, Exports (Ancient Rome) Beards, Beehives, Boots, Souls (Russia, 1702) Bachelors (England, 1695; Missouri, 1820)

8. Each person is responsible for filing a tax return. Voluntary Compliance

9. Tax Avoidance versus Tax Evasion Tax Evasion: Failure to pay legally due taxes Tax Avoidance: Legal means of decreasing your tax bill

10. Who should pay? BENEFIT PRINCIPAL Those who receive the benefit should pay for it ABILITY TO PAY People with higher incomes should pay more in taxes

11. How is it paid? DIRECT Paid directly to the government Advantage: Pay-as-you-earn You know how much INDIRECT Tax is hidden in the price of the goods

12. Tax Brackets – 2010 Taxable Income 1. Income tax-tax paid on income received

13. Types of Taxes 2.Sales Tax- consumption tax charged at the point of purchase for certain goods and services 3.Property Tax- paid for owning land & property 4.Excise Tax- placed on certain products to discourage use

14. Types of Taxes (continued) 5.Social Security Tax- tax is imposed upon working people and their employers 6.Estate & Gift Tax- limits the build-up of wealth 7.Business & License Tax- fees for having a business or activities 8.Tariffs- taxes on imported goods

15. What are the 3 levels of Government? Federal State Local

16. The Federal Government Dollar- Where It Comes From Excise, Customs, Estate, Gift, and Miscellaneous Taxes 7% Personal Income Taxes 43% Social Security, Medicare, and Unemployment and other Retirement Taxes 35% Corporate Income Taxes 7% Borrowing to Cover Deficit 8%

17. What’s the Trend?

18. The Federal Government Dollar- Where It Goes Law Enforcement and General Government 3% Social Security, Medicare, and other Retirement 38% National Defense, Veterans, and Foreign Affairs 20% Social Programs 21% Physical, Human, and Community Development 10% Net Interest on the Debt 8%

19. What is our Federal Debt? $14 TRILLION!!! http://www.usdebtclock.org/index.html

20. Federal Tax Dollars Main source: Personal Income Tax Main expenditure: Social Security State Tax Dollars Main source: State Income Tax 2nd: Sales Tax Main expenditure: Health & Human Services 2nd: Education

21. 2 Tax Rates PROPORTIONALPROGRESSIVE $ $

22. And where did it go? (Federal) SS, Medicare National Defense Interest on Debt

23. Information on taxpayer returns is private Taxpayer Rights Taxpayers have the right to appeal an IRS decision