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Government and Money

Government and Money . Chapter 16. How is government involved in your everyday life?. Transportation Education Product safety Worker safety T axation.

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Government and Money

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  1. Government and Money Chapter 16

  2. How is government involved in your everyday life? • Transportation • Education • Product safety • Worker safety • Taxation

  3. Public Goods- special type of goods or services that government supplies to its citizens at the same time without reducing the benefit each person receives. • Merit Good Society considers these desirable by government leaders- museums, ballets, etc Government may subsidize these goods • Demerit Good- society considers these undesirable- tobacco, alcohol, gambling Government taxes and regulates demerit goods “Sin Taxes”

  4. Do you think you have a responsibilityto help those less fortunate than you? • Income redistribution- govt. activity that takes money from some ,through taxes, to help citizens in need. • Tax dollars are used to subsidize 2 categories of assistance • Social-Insurance Programs • Public Assistance Programs

  5. Social-Insurance Programs • Programs that pay benefits to retired and disabled workers, their families and the unemployed. Examples: Social Security Medicare Worker’s compensation Unemployment insurance A portion of your pay goes to these programs.

  6. Public-Assistance Programs • Same as Welfare • Helps people based on need, regardless of age. • You don’t have to pay taxes to benefit • Examples- Welfare Medicaid Supplemental Nutrition Assistance Program (SNAP), (Food Stamps)

  7. Primary goal of the government: • Stable growth • Unemployment • Low inflation

  8. How does the government intervene in economic activity?

  9. The Budget • Goal: to balance what the govt. takes in with what it spends. • Budget surplus- takes in more than it spends • Budget deficit- spends more than it take in

  10. National Debt- the total amount of outstanding debt for the federal government. • 1998 the government began to run a budget surplus • 10 year budget surplus was projected but it didn’t happen • Sept. 11 terrorist attacks happened http://www.usdebtclock.org/

  11. Taxation • Taxes are justified based on 2 basic principles • benefits-received principle- those who use the service pay the taxes Example- tax on gas or alcohol • ability-to-pay principle- those with higher income pay more taxes Example- property taxes

  12. P. 432 In Your book

  13. Forms of Taxation • Proportional Tax- a portion of your income Example- Everyone pays 10% • Progressive Tax- the higher the income the more tax you pay Example- federal income tax • Regressive Tax- % you pay goes down the more money you make Example- sales tax on food

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