Raising Money Types of Taxes Managing the Country’s Money.

PAYING FOR GOVERNMENTCHAPTER 12

Raising MoneyTypes of Taxes

Managing the Country’s Money

MANAGING THE COUNTRY’S MONEY

Chapter 12Section 3P305-308

Key Terms

Balanced Budget – revenues = expenditures (income) = (outgoing)

Surplus – an excess of money Deficit – shortage of money

Audit – careful examination by accountants of all revenues and expenditures

Every level of government has a tax collection agency

Internal Revenue Service

• Collects taxes• Agency of U.S. Department of Treasury

U.S. Customs Service

• Collects tarifs on imported goods

• Agency of Department of Homeland Security

State & Local Tax Agencies• State:• income taxes• Inheritance taxes

• Local:• Property tax

State Tax AgenciesState income taxesInheritance taxes

Local Tax AgenciesLocal property

Collected monies go to different Treasuries

FEDERAL LEVEL STATE & LOCAL LEVEL

U.S. Department of Treasury Authorized by

Congress Spends federal tax

dollars

Comptroller Authorized by:

State Legislature City Council

Acts as watchdog of Treasury

Responsible for ensuring public funds spent as allocated

Spending Public Money

Governments collect money to pay for goods and services citizens want

BUDGET – lists the amount and sources of: Expected Revenue – money your going to

make/get Money income

Proposed expenditures- money your going to spend Money outgoing

Planning Government Spending

POTUS & O.M.B draw up Budget

POTUS proposes budget to Congress

Legislative branch passes

the budget

Executive Branch spends

money according to the budget

How to spend money = lots of political debate

OMB & Preparing the Federal Budget

Evaluate program

s

• Effectiveness

• Funding needs

Creates Budget

• Expected tax Revenue

• Proposed Expenditures

Advises POTUS

• Together establish priorities

(B)O.M.B.

2011 Presidential Budget

$3.8 trillion budget proposal for fiscal year 2011 includes billions to put people back to work and imposes new fees on some of the nation's largest banks

Congress and the Budget

POTUS SENDS budget to Congress

Congress STUDIES the

Budget

House of Reps and Senate

DEBATE budget

Both houses APPROVE final

version of budget

Budget is passed as

APPROPRIATION BILL

Bill sent to POTUS for

APPROVAL or VETO

VETO = Back to Legislature

Approval = Law

Budget is implemented –

taxes spent

The National Debt Balancing the Budget

Balanced Budget – revenue equals expenditures money collected EQUALS money spent Surplus – excess of money money collected GREATER money spent

Deficit – shortage of money money collected LESS THAN money spent

If there is a deficit then government must borrow money to pay for difference between income and expenses – Government must pay interest on money it borrows

National Debt – deficit + interest on borrowed money

Deficit

U.S. National Debt

There is no constitutional limit on the size of the national debt, congress establishes a limit, but can raise the limit through a vote

Audits

Audit - examination by an accountant of a government’s income and expenditure

The U.S. Government Accountability Office performs audits on most federal expenditures

http://www.usdebtclock.org/