Download Federal Taxes, Revenues and The Budget:

Congress exercises
the taxing power
to finance the
costs of operating
the Federal
Government as well
as for non-revenue
purposes!
Constitutional
Limitations:
• Taxes may be levied only for public
purposes
• Export Taxes are prohibited
• Direct taxes are to be equally
apportioned based on a state’s
population
• Indirect taxes are to be levied at the
same rate across the country
Implied
limitations:
•The federal government may
not tax state or local
governments, and vice-versa
•This was a result of the court
case, McCulloch v. Maryland
•Non-profit and Religious
organizations are generally not
taxed
INCOME TAXES:
• These are progressive
taxes on individual
incomes.
• These are usually payroll taxes- taken from
pay by employer
• Businesses pay
Corporate Income Taxes
Income taxes are the largest source
of revenue for the national
government!
Other Federal Taxes:
• SOCIAL INSURANCE TAX:
- paid as a pay roll tax
- funds social insurance programs
- this is a regressive tax
• EXCISE TAX: tax on goods
manufactured and sold within the U.S.
• CUSTOMS DUTIES (tariffs):
a tax on imported goods; often
considered a “protective” regulation
State Taxes:
•Sales Taxes
•Income taxes
•User Charges
•Highway Tax on
Gasoline
Local Taxes:
• Personal Property
Taxes
• Property Transfer Tax
• Licensing and User
Charges
• Meals Tax!!!
• Income tax and sales
taxes are not used in
Henrico
The Government taxes for nonrevenue purposes:
•To regulate certain
activities
•To discourage certain
activities
•To protect American
business
Different tax structures affect taxpayers
differently and can be distinguished by whether
the tax burden falls more heavily on those with
higher or lower income levels.
• A progressive tax takes a larger percentage of taxes
from people in higher-income groups than from people
in lower-income ones; the United States federal income
tax is an example.
• A proportional tax, also called a flat tax, is one in which
the same tax rate is paid by people at all income levels.
People who earn more pay more, but they pay the same
percentage rate. Property tax is an example of a
proportional tax.
• A regressive tax applies in the same way to everyone,
but the tax paid represents a larger share from lowerincome groups than from higher-income groups. Sales
tax is a regressive tax.