govt growth not inherent in Presidency unlike Congress Americans are both

Govt growth not inherent in presidency unlike

This preview shows page 15 - 17 out of 31 pages.

gov’t growth not inherent in Presidency, unlike CongressAmericans are both ideologically conservative and operationally liberaltend to elect President who reflects ideologytend to elect Congress consistent w/ appetite for public serviceChapter 13: The Budget: The Politics of Taxing and SpendingTerms of Referencebudget - policy document allocating burdens (taxes) and benefits (expenditures)deficit - expenditures exceed revenues in a fiscal year; national gov’t spends more money than it receives in taxesdebt - sum of all deficits across all yearsinterest - premium paid regularly to lenders for privilege of using their moneyXIV.Federal Revenue and Borrowing3 major sources of federal revenue - personal income taxes, corporate income taxes, and social insurance taxesA.Personal and Corporate Income Taxincome tax - required to pay gov’t portion of money earnedfirst 100+ years of nation - fees collected on imported goods financed most of federal gov’tfirst income tax in 1984 found unconstitutionalSixteenth Amendment - explicitly permits Congress to levy income taxInternal Revenue Service (IRS) - est. to collect income tax; 140+ million individual tax returns each yearincome tax generally progressive - those w/ more taxable income pay more taxes at higher ratesrates range from 10-35%income tax NOT same as payroll tax42% paid no taxes - below income level where tax is due; affected by tax credits and other programs1% of taxpayers pay 37% of taxestop 10% paid 70%bottom 50% paid 2%tax reform - how? no agreementclose loopholes, restore fairness, flat tax optionB.Social Insurance Taxespaid by both employers and employeesfunded by flat-rate payroll tax + matching employer contributionsmoney deducted from paychecks and matched by employersEmployees 7.65% + Employers 7.65%Self-employed - 15.3%capped so Americans w/ income < $113K pay proportionally more than wealthyfasted growing source of federal revenue - due to cuts in income taxes and incr.costs1957 - 12% of federal revenues
Background image
POLS 206 - Roblyertoday - 1/3 total federal revenueC.Borrowingtax revenue doesn’t cover federal gov’t expendituresTreasury Department sells bonds - guarantees interest to bondholdersintragovernmental debt - what Treasury owes Social Security and other trust funds because gov’t used revenue from social insurance taxesmost gov’t borrowing not used for capital needs - used for day-to-day expensesnational debt = $17.5 trillion6% of federal expenditures goes to pay interest on national debtborrowing money shifts burden to future generations/taxpayerspaying interest not option - money for interest is money lost to USspending incr. when revenue declines due to bad economy - greater need for social safety netforeign investors hold majority of public debtneed to borrow creates issue for Congressdebt ceiling - limit on how much gov’t may borrowif Congress must incr. debt ceiling, creates opportunity for opposing party to
Background image
Image of page 17

You've reached the end of your free preview.

Want to read all 31 pages?

  • Spring '06
  • SomeonethatWasJustTryingtogettheirDoctorate
  • President of the United States, United States Congress

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture