Chapter 10: Some Pictures

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Chapter 10: Some Pictures. No creative thinking…. 1. Give a few examples of government waste with taxpayer dollars… do you know any others not in the book? - Bridges to nowhere, elevator attendants, boondoggles, chauffeurs, etc…. - PowerPoint PPT Presentation

Transcript of Chapter 10: Some Pictures

Chapter 10: Some Pictures

Chapter 10: Some PicturesNo creative thinking

1. Give a few examples of government waste with taxpayer dollars do you know any others not in the book? - Bridges to nowhere, elevator attendants, boondoggles, chauffeurs, etc

2. What is the budget? How much was our nations budget by 1994 and how much did that come out to for each person? How was most of the governments budget paid for in the 1800s? (Could we still pay for it this way today?)

Check out this interactive budget website:

-Outline of how much and in what ways the money the government collects will be spent-1994=>$1.5 Trillion budget, about $6,000 per person-1880=> To pay for the budget the government A) Sold publicly held lands and B) Placed taxes on importsThis is the white houses interactive budget

3. FYI the Federal Government employs nearly 2 Million people today, the largest single employer outside of the Postal Office. If you are at all interested in working for the federal government you should check out, they have all of the average earnings of employees in the government. Its pretty interesting. We can check it out in class if you want.

4. What was our countrys GDP in 2010 not 2001. Also make sure you understand what GDP is.GDP is the total of all goods and services produced in the U.S. in a given year Ours for the past year was around $15 TRILLION.

Personal Income Tax: (Tax paid on your income from your job)First passed and continued with what amendment?Passed during the Civil War to help pay for the war, 16th amendment allowed it to continue beyond the war.What are progressive tax rates and what is the max tax bracket today from the federal government? ( If youre interested to see what you could be making and how much youll be paying in taxes, we can maybe do that -Progressive tax rate: the more money you make, the more you pay in taxes. Maximum today is 39.6%. Look at the above website to figure out how much people pay in personal income tax with different salaries.

Social Security Taxes (designed to provide benefits for old age factory and office workers)What do these taxes cover? When did it start to run out of money? Will it be around when you are?

- Covers 1) elderly and their spouses if they die, 2) disability insurance, 3) unemployment insurance, 4) medical insurance, 5) retirement plans for some

- Started to run out of money in the 1980s, dont expect it to be there by the time you retire.

- Big reason is the number of people who pay into the system v. the number who withdraw (Baby Boomers)

Corporate Income Taxes What can they tax from corporations? Can these be avoided or can you think of a way that companies can get around them? A corporations profits may be taxed, companies much like individuals find loopholes and deductions, they are given tax breaks to open a factory in a place (Toyota, Whirlpool, etc)

Excise Tax: Can be thought of as a sin tax or luxury tax. When you buy certain goods (gasoline, liquor, cigarettes, etc.) they have an extra tax added, the excise tax.

People say an excise tax is harmful because it forces the rich and the poor to pay the same amount. If you think about it, it makes sense because the price of goods is the same no matter what your income is. For example, if you made $10,000 a year, buying gas on a weekly basis is a larger part of your income than someone who makes $100,000 a year.

There is also an argument that this slows economic growth. It relates back to one of the causes that continued to make the Great Depression so devastating: there are more poor people in the world than wealthy. If they dont have money to spend, then business owners dont sell as many products. If they dont sell products, they dont make money. If they dont make money, they downsize business. Then people dont have money because they dont have a job so they dont buy goods which means etc. I hope you understand this.

Estate and Gift Taxes (Inheritance Tax)What is the maximum lifetime credit for estate and gift taxes? How much can you give to your children every year, tax free? Maximum lifetime credit for estate and gift taxes: $675,000 You can give your children $10,000 every year tax freeCustoms Tax: Tax on goods brought into the country. Like when you fly, you have to go through customs. In early America, we had high customs taxes (raised the price on foreign goods to make them more expensive) to encourage people to buy American goods. As our industry and country has grown, we have lowered the tax on goods brought into the country. Because, lets face it, you dont really want to pay $30 for 3 pairs of socks, and neither do I. Is there anything that you will always buy American, no matter what the cost?6. What does the 14th amendment require? So lets say you had a job, bought a house, paid for it completely and then lost your income. Could failure to pay your property taxes cost you your house?

Taxes must be fair (applied to all races), and they can be imposed only for public measure (so you cant just tax someone who comes into your store so you can raise an extra $35,000 for a vehicle. You can charge them more, but you cant call it a tax)

7. How does the IRS keep American taxpayers honest? What if they suspect you of tax evasion? What happens when you pay too much money? What is significant about May 5 and what happens if you cant prove your tax returns are accurate?

Tax Withholding: employers subtract a certain amount of an employees paycheck and that money goes directly to the Treasury. This way, you dont have to bother with the hassle of sending a check every two weeks, its done automatically, for you.

If they suspect you of tax evasion, then you may be audited. During this process, they will inspect your books from previous years to see if you have under reported or withheld money that was due. If they find out you owe money, then you pay how much you owe PLUS interest on that money the government will always find a way.

Honestly, if youre at question 8 you really should check out the above website to have it make sense.

Next pictures go with question 9.

Deficit spending is spending more than you collect in taxes and other revenue. Some say you need deficit spending during a recession, because it creates jobs, which puts money back into the hands of people, which gets them to spend, and then the entire economy will start back up. Others say it adds to our national debt.

10. What is a debt ceiling and what are two problems with paying more on interest? (Theres a flaw to the second argument, and that is that not all of the GDP goes to paying for our national debt)Debt ceiling: limit on the national debtTwo issues when you pay down the interest: dollar loses value, inflation increases

11. Who makes the final decision as to how much money will be spent:President (submits the budget) Congress (rejects or approves the budget submitted by the president)

12. What is the argument for short-term commitments causing problems? What are porkbarreling and logrolling? Lastly is the budget the President submits short and concise?Organizations cannot plan long term goals if there is a chance funding might be pulled in a year. (example: making a spacecraft land on the moon, creating renewable forms of energy, etc)Porkbarrel: additional projects tacked on to a billLogrolling: approving someones pojects/bill so they will approve yours (you scratch my back, Ill scratch yours)

-This is an example of inflation in Germany after WWII: money becomes worthless because there is too much in circulation. Notice, thats a young girl building a pyramid of money in the middle of the street and nobody is trying to steal it.-So, how do you raise the value of the money? Get it away from the people.-How do you do that?Raise taxes (less money in circulation)