Taxes Federal government –depends mostly on income taxes, which are only mildly progressive –other federal taxes, such as Social Security, are regressive –recent tax cuts for the rich will make the distribution of wealth more unequal State governments depend mostly on sales taxes Local governments depend mostly on property taxes
The Deficit and the National Debt The budget deficit is the annual shortfall between what the government spends and what it takes in. The national debt refers to the total of what the government owes. Benefits and dangers of national debt Rise of national debt typically associated with war
Social Security Formally known as Old Age, Survivors, and Disability Insurance (OASDI) Funded by payroll tax Due to an aging population, Social Security will run a deficit unless reforms are made. Democrats favor small reforms. Republicans favor a major overhaul.