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Economists view the government as a type of _____.
business
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Money goes into the government in the form of ____ and _____ go out.
taxes; services
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Just as business is concerned with ____, ____, and ____, so is the government.
income; profit; accountability
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What four ways does the government get money?
- 1. Income tax
- 2. Social Security tax
- 3. Excise tax
- 4. Other misc. taxes
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What percent of government earnings is both individual and corporate income tax? What affects this amount?
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What percent of government earnings is based upon Social Security tax? What affects this amount?
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What is excise tax? What percent of government earnings comes from this tax?
- Taxes on alcohol, tobacco, transportation (gas)
- 4%
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What is the greatest amount of income for the government to operate from? What percent?
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What three countries lead the west in taxes? What do these taxes pay for?
- Denmark, Norway, and Sweden
- Education, medicine, etc.
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What country does not collect taxes? Why?
- Muslim nations
- Against the Koran
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What two countries are increasing their taxes? Why?
- China and Japan
- Providing more government services
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What five places does our money go?
- 1. Transfer Payments
- 2. National Defense
- 3. Interests on the Debt
- 4. Education Assistance
- 5. Foreign Aid
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What percent of our money goes to transfer payments? What is included in this?
- 56%
- Social Security - 22%
- Medicare - 10%
- Income Security - 15%
- Health Assistance - 7.5%
- Veterans Benefits - 2.5%
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What percent of our money goes to National Defense? What is included in this?
- 19%
- Armed services and business contractors or provide weapons and supplies
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What percent of our money goes to Interest on the Debt? Who collects this debt?
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What percent of our money goes to Education Assistance?
4%
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What percent of our money goes to Foreign Aid? What countries receive the most of this money?
- >1%
- Isreal, Egypt, and other Middle East countries
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What three taxes go to support state and local budgets?
- 1. State sales tax
- 2. State income tax
- 3. Property tax
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What three things do state and local budgets often deal with?
- 1. education
- 2. transportation
- 3. public welfare assistance
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What four reasons do governments collect taxes?
- 1. pay for cost of government (transfer pay)
- 2. protect selected industries (tariffs)
- 3. discourage certain activities (alcohol, cigarettes)
- 4. encourage others through tax breaks (business entrepreneurship)
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What is the benefits-received principle?
those who benefit the most should pay the most (hurts the poor)
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What is the ability-to-pay principle?
tax in proportion to who is best able to pay taxes (hurts the rich)
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What are the three types of taxes? Explain each
- 1. Proportional tax: everyone taxed the same rate (flat tax)
- 2. Progressive tax: rich pay greater than the poor
- 3. Regressive tax: poor pay more than the rich (sales tax is considered regressive)
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What is the democrats' view of taxes today? Republicans? What is the reality?
- Democrats: tax money goes to support important programs
- Republicans: lower taxes and cut services
- Reality: Americans want a lot of services and lower taxes - the result is federal debt and deficit
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