Government Finances: Fiscal Policy, Taxing and Spending

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Government Finances Fiscal Policy, Taxing and
Spending

• Fiscal Policy
• Government Budget
• Federal Government Revenue
• Federal Government Expenditures
• State Government
• Local Government

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Fiscal Policy

• Fiscal Policy government policy toward taxing
  spending.
• Federal Budget
• Prepared annually by the President
• Approved by Congress
• Budget Year October 1 September 30
• Government Spending
• Mandatory Spending does not need annual
  approval.
• Discretionary Spending needs annual approval.
• Types of Taxation
• Progressive Tax tax that takes a larger
  percentage from the wealthy (ability to pay
  principle)
• Regressive Tax tax that takes a larger
  percentage from lower incomes (benefits received
  principal)
• Proportional Tax tax that takes the same
  percentage from all incomes.

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GOVERNMENT BUDGET

• Government Revenue - that government has to
  operate. Taxes, fines, user fees, etc
• Government Expenditures - the government must
  spend on programs it operates.
• Balanced Budget Revenue Expenditures
• Budget Surplus - Revenue gt Expenditures
• Budget Deficit - Revenue lt Expenditures
• National Debt Accumulation of Budget Deficits

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Federal Government Revenue

• Federal Taxes
• Income Tax - 1 source of government revenue.
  Progressive tax on individual earning.
• Payroll Tax 2nd largest source of income
• Corporate Income Tax up to 36 of profits.
• OTHER FEDERAL TAXES
• Excise Tax
• Estate Tax
• Luxury Tax
• Social Security Tax

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Federal Government Expenditure

• Social Security 21.2
• National Defense 17.4
• Income Security 14
• Medicare 13.5
• Health 10.5
• Interest on Debt 8.2
• Other 15.2

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State Government

• Intergovernmental Revenue - paid from one level
  of government to another. States get it from the
  federal government.
• Sales Tax Paid by retail stores to the state
  government. (passed onto consumers)
• Income Tax taken from workers paychecks.
• Excise Tax Alcohol, tobacco, gasoline.

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Local Government

• REVENUE
• Intergovernmental Revenue paid by the state
  government to local governments.
• Property Tax paid on land, houses,
  automobiles, etc
• EXPENDITURES
• Education
• Police Fire Protection
• Water Supply
• Sewage Sanitation

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FEDERAL INCOME TAX TABLE
TAX RATE SINGLE MARRIED
10 0-8,025 0-16,050
15 8,025-32,550 16,050-65,100
25 32,550-78,850 65,100-131,450
28 78,850-164,550 131,450-200,300
33 164,550-357,700 200,300-357,700
35 Over 357,700 Over 357,700