As a result, governments must weigh their need to borrow against the future likely consequences of paying back the loan. The Federation of Tax Administrators (FTA) is a nonprofit organization that provides research services for the tax administrators of all fifty states. Benefits to be paid out will exceed income (including interest) as early as 2010. The challenge for the federal government is deciding when, and by how much, money supply and credit availability should be changed to maintain a healthy economy. Even though tax increases and cuts in services can be enacted to raise money, these actions have political and economic repercussions. Education positions were the single largest component, accounting for 6.9 million employees and $24.3 billion in payroll (more than half of employee numbers and payroll). Limited taxation is favored by those who believe that workers and companies with more available money to spend will participate to a greater extent in the economy. Education was the largest single component, accounting for $525 billion and encompassing about 37% of the total. Thus, FY 2009 covers the period of October 1, 2008, through September 30, 2009. For accounting purposes, the federal government operates on a fiscal year (FY) that begins in October and runs through the end of September. Objectives It is, however, projected to put increasing pressure on the general fund because of rising health-care costs. In other words, the payroll tax for Social Security would need to be increased by 2% to make up the difference. Others observe that cutting taxes without severely reducing government spending leads to large budget deficits and undermines the government programs that provide a social safety net to the disadvantaged. 51. In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other. The ravages of the Great Depression brought a level of desperation (e.g., the unemployment rate was as high as 25%) that encouraged leaders to attempt to influence macroeconomic factors. Federal policy makers also engage in purposeful manipulation of the U.S. economy at the macroeconomic level— for example, by influencing supply and demand factors. Monetary changes are achieved indirectly through the nation's banking system. Likewise, an undersupply can lower consumer demand too much and stifle economic growth. In reality, the actions of fiscal policy can have complicated (and unforeseen) effects on the U.S. economy. Another outcome would be a greater share of one's income being available for the accomplishment of one's private good. Employers that meet certain criteria (regarding number of employees and amount of payroll) pay both state and federal unemployment taxes. Politicians who wish to remain in office are reluctant to displease their constituents. In February 2008 the Census Bureau released detailed data on state tax collections for 2007. This optimism is based in part on the power that governments have to tax their citizens and control the cost of provided government services. The relationship between the states and the federal government. Gandhi estimates that an American family of three with an annual income of $50,000 paid an average of 8.7% of its income in state and local taxes in 2006, including $2,153 in property taxes, $1,265 in state or local income taxes, $943 in sales taxes, and $250 in automobile taxes. Taxes, particularly property taxes, are an important source of revenue for many local governments. FIXING THE PROBLEM. Estate taxes are levied against a person's estate after that person dies; gift taxes are levied against the giver while the giver is alive. During early 2005 President Bush campaigned for significant reform of the Social Security program, including allowing younger workers to opt out of the Social Security plan and establish their own retirement savings accounts. Excise taxes can be intended to generate revenue or to discourage use of the taxed product (as in high cigarette taxes that raise the per-pack cost in an attempt to discourage smoking). A huge increase in the aged population is expected to take place during the late 2010s and 2020s because of the baby boom that followed World War II. TAX CUT ADVOCATES. The federal government also borrows from itself. In “Frequently Asked Questions about Strengthening Social Security” (2008, http://www.aarp.org/money/social_security/frequently_asked_questions_about_social _security.html), the AARP advocates increasing the income limit subject to Social Security withholding. If permitted by their constituents, governments may choose to increase these values to raise additional revenue. The Stamp Act of 1765 was the first tax imposed specifically on the North American colonies by the British Parliament and was strongly resisted by the colonists, who maintained that only representative legislatures in each colony possessed the right to impose taxes. The budget must also be approved by the U.S. Senate. The FY 2009 budget includes. When cash revenues from taxes, fees, and other sources are not sufficient to cover spending, money must be borrowed. According to the IRS (May 1, 2008, http://www.irs.gov/businesses/small/article/0,,id=164871,00.html), as of 2008 only total taxable estates and lifetime gifts exceeding $1 million actually had to pay estate and gift taxes. 78 Translation of evidence to policy action: needs and difficulties Local and national governments have important roles in bringing healthier food and food security to their populations. Fiscal policy revolves around spending and taxation. Assessment ratios can vary from less than 0.1 (less than 10%) to more than 1.0 (greater than 100%). The years 1998 through 2002 had budget surpluses. The payroll for that month was nearly $16.8 billion. One method used by government to borrow money is the selling of securities, such as bonds, to the public. Governments are responsible for providing services that individuals cannot effectively provide for themselves, such as military defense, fire and police departments, roads, education, social services, and environmental protection. To fund itself, the federal government uses the money of its constituents. True. Beginning in 1970 the United States had an annual deficit for nearly three decades. According to the Census Bureau (June 28, 2007, http://ftp2.census.gov/govs/apes/06fedfun.pdf), the federal government employed 2.7 million civilian (nonmilitary) employees as of December 2006. To generate the revenue necessary to provide services, governments collect taxes and fees and charge for many services they provide to the public. During the late 1970s the national debt began a steep climb that has continued into the 2000s. Other major sources of revenue included sales taxes (19%) and individual income taxes (14%). The U.S. Department of the Treasury explains that property taxes in the United States date back to the Massachusetts Bay Colony in 1646 and that the separate states began imposing property taxes soon after declaring independence from Britain. In the press release “Treasury Releases Papers on Anniversary of President's 2003 Tax Relief” (May 28, 2008, http://www.ustreas.gov/press/releases/hp999.htm), the Department of the Treasury announces the issuing of two reports in May 2008 that highlighted “the benefits to American families and businesses from the tax relief enacted over the last seven years.” According to the first report, Topics Related to the President's Tax Relief (http://www.treasury.gov/press/releases/reports/president_taxrelief_topics_0508.pdf), the tax cuts have made the individual income tax “highly progressive.” As proof, the Treasury cites data indicating that in 2005 the top 1% of taxpayers paid 39.4%, the top 5% paid 59.7%, and the top 50% paid 96.9% of all individual income taxes. Property taxes are generally levied annually and calculated by multiplying the property value by an assessment ratio to obtain a taxable value. Additional measures were accelerated or added through the Working Families Tax Relief Act of 2004, the American Jobs Creation Act of 2004, the Tax Increase Prevention and Reconciliation Act of 2005, the Pension Protection Act of 2006, and the Economic Stimulus Act of 2008. According to the FTA, several states imposed a single rate for all income levels, including Colorado (4.6%), Illinois (3%), Indiana (3.4%), Massachusetts (5.3%), Michigan (4.4%), Pennsylvania (3.1%), and Rhode Island (25% of federal tax liability). In his 2003 State of the Union address (http://www.whitehouse.gov/news/releases/2003/01/20030128-19.html), President Bush spoke about the need for health care reform, particularly in Medicare. As colleges and universities make in the U.S. president must present a proposed budget to the public the that. Have varying age requirements and other sources are not suffici… CHAPTER 3: role. 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one potential role of government is to provide

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