Economics Chapter 14 Notes Part 2

1.     Regulates Economic Activities

            a. Protects Consumers (BBB) Better Business Bureau

            b. Promotes Competition No Monopolies

            c. Labor/Management Negotiator PATCO (Strikes and Lockouts)

            d. Regulates Negative Byproducts (pollution laws)

4.     Promotes Economics Stability

            Federal Reserve

FEDERAL BUDGET AND NATIONAL DEBT

Deficit Spending: Spending more money than we take in

Our Government Spends More Money than it takes in

Public school is the #1 state and local expense.  900 million a year budget

They pay $350 million for teacher’s salaries alone.

National Debt: our government is spending more money than you are making.

14 Trillion Dollars in Debt

National: Number One Expenses: Social Security, Medicare/Medicaid

FORMS OF TAXATION

1. Progressive

As you make more money, you pay a higher percentage of that money in taxes. It is based on ability to pay.  As you make more money you will move up different tax brackets. You make more money, you will pay more in taxes.

EXAMPLE: FEDERAL INCOME TAX

10% to 38%. If you win 1 million, you can take home 650 thousand, after taxes. 

2. Regressive

A tax on required items. It hurts poor people more than rich people. It is based on percentage of income spent on a product. 

EXAMPLE: TAX ON FOOD

Poor spend a larger percentage on food so they pay more tax.

3. Proportional- AKA Flat Tax

Everyone pays the exact same percentage. The percentage stays the same so if you make more money you still pay the same percent (some state income).

EXAMPLE: Arkansas State Tax

MAJOR TAXES

·       Income tax on how much money you make (Federal and State)

·       Excise- tax on a specific product (Tax on tobacco, Gas, and Alcohol) (Federal)

·       Estate- tax on property of dead people (Federal). When someone dies the government takes a percentage before the kids can inherit it.

·       Inheritance- only tax people that inherit property. (State) When your kids get the money they have to pay this state tax.

·       Gift tax- if you give someone more than $13,000, you have to pay a gift tax. (Federal) Except- if you give to a charity, you don’t have to pay this. If you are paying for tuition for someone, you don’t have to pay this tax.

·       Sales- tax when you buy products.

·       Property: tax on buildings and land (State and Local)

·       Customs duties- Tariff- a tax on Imports