Download Chapter 9 Section 2

Chapter 9 Section 2
Why was it necessary to pass the 16th Amendment to the Constitution?
The Supreme Court found collecting Income Tax by the Federal Government to be
unconstitutional therefore; Congress added an amendment to the Constitution of the United
States giving that power to Congress
2. The payroll taxes includes the Social Security and medicare taxes.
1.

 The individual income tax has been the largest single source of federal revenue since
1950, averaging 8 percent of GDP. What other sources contribute to the Federal
Revenue???
 Corporate, Excise, Customs, Estate and Gift, Borrowing,
Miscellaneous
3. Explain the Federal Insurance Contributions Act.
The Act was passed by Congress allowing the Federal government to
levy on employers and employees equallty to pay for Social Security
and Medicare. Social Security is 6.2 % of wages or salaries
4. What is the amount of pay that caps the amount of Social
Security payments made to the Federal Government?
$106,800.
5.
Revenue from the corporate income tax fell from between 5 and 6 percent of GDP in the early 1950s to 1.3 percent of
GDP in 2010. Please explain why that could possibly be happening.
This question requires the student to give independent answers such as:
The number of loopholes have grown allowing the corporations to lower the amount of taxes they must pay.
The loopholes are written and pushed through Congress by the very corporations they are intended to protect.
Corporations are allowed to keep foreign profits out of the United States to keep profits away
from US taxes
6. Why has the federal government become more reliant on borrowing as a source of revenue?
Because the amount of spending has continued to grow although the revenue has not so the
government simply borrow the rest by selling bonds to investors.
7. What are the 8 possible sources for federal revenue? Individual Income Tax, FICA Taxes,
Borrowing, Corporate Income Taxes, Excises Taxes, Estate and Gift taxes, Custom
Duties and Miscellaneous Fees
8.
If you visit this park, what type of revenue would that be
considered for the Federal Government? User Fee
STATE and LOCAL GOVERNMENT REVENUES
9. Explain intergovernmental revenue. When one level of government transfers funds to another
level of government to provide assistance with expenditures. Expenditures such as welfare,
education, highways, health, and hospitals receive most of the help from intergovernmental
Revenue Example:
10. Give a list of ways a state may collect revenues. Include sources such as state colleges.
Sales Taxes, Individual Income Tax, tuition and fees collected from state-owned colleges,
universities, corporate income taxes, and hospital fees
11. Where do local governments get the majority of their money?
Slightly more than one third of local revenue comes from intergovernmental transfers from
state governments.
12. If money is earmarked, what does that mean? Most money earmarked by state governments
are earmarked for what purposes? If money has been earmarked by the state then it is
designated to be used for that purpose and that purpose only. The majority of the money
received by local governments from states is usually reserved for use in education and public
welfare.
13. What all can a property tax be assessed on?
Can be taxes on tangible and intangible possessions (mostly tangible) most reliable property
tax is on real estate
14. Why would there be an efficiency problem with property tax?
There is a problem with valuation of the property as well as having to hire people to
investigate the ownership of new personal property
15. Explain the job of a tax assessor?
Person who assigns value to property for tax purposes
Saraland government finances - Revenue in 2002 (per resident):

Charges - Solid Waste Management: $548,000 ($39.97)
Sewerage: $513,000 ($37.42)
All Other: $175,000 ($12.76)

Federal Intergovernmental - All Other: $27,000 ($1.97)

Miscellaneous - Interest Earnings: $515,000 ($37.56)
General Revenue, NEC: $289,000 ($21.08)


Revenue - Water Utilities: $1,048,000 ($76.44)
State Intergovernmental - All Other: $23,000 ($1.68)

Tax - Total General Sales: $4,745,000 ($346.10)
NEC: $635,000 ($46.32)
Property: $582,000 ($42.45)
Public Utilities: $420,000 ($30.63)
Motor Fuels Sales: $271,000 ($19.77)
Other Selective Sales: $147,000 ($10.72)
Alcoholic Beverage Sales: $137,000 ($9.99)
16.
List ways the local government can collect revenue.
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