Post on 05-Jan-2016
description
Taxes & Government Budget
Budget deficits & debt
3 Types of Taxes
• Progressive-– Higher % as income rises– Example: Federal Income Taxes
• Regressive-– Consumes larger % of lower income worker’s salary– Example: Gasoline Tax, Bridge Tax
• Flat– Same % for everyone– Example: Sales Tax
Federal Gov’t Taxes
• Federal Income Tax– Progressive Tax: tax rate increases as income increases
• Social Security Tax-– 6.2% of salary on first $110,000 income– Your employer also pays 6.2%!!– Benefit: Receive monthly Gov’t pension starting at 65 (or older)
• Medicare Tax– 1.45% of entire salary– Why: Gov’t health insurance starting at 65
2013 Federal Tax Rate Brackets
Tax Rate Single Married filing Jointly or Qualifying Widow(er)
10% Up to $8,925 Up to $17,850
15% $8,926 – $36,250 $17,851 – $72,500
25% $36,251 – $87,850 $72,501 – $146,400
28% $87,851 – $183,250 $146,401 – $223,050
33% $183,251 – $398,350 $223,051 – $398,350
35% $398,351 – $400,000 $398,351 – $450,000
39.6% $400,001 + $450,001 +
Standard Deduction $6,100 $12,200
New top bracket
Bush Tax cuts are now permanent
Trump’s Tax Plan
Goal: Simplify Tax Code•6 to 3 tax brackets•Less deductions (close loopholes)•Be “revenue neutral”•Do the rich benefit the most?
The Government BudgetGovernment SpendingGovernment Revenue
Taxes All Gov’t Expenses
2014 Budget Summary
• Spending: $3.651 Trillion dollars
• Revenue $3.002Trillion (from taxes)
• Deficit: $649 Billion
• Debt: $18.4 Trillion (2015)
2016 Numbers
$4.0 Trillion
$3.3 Trillion
$650 Billion
$20.4 Trillion
Budget Handout
Government Spending
• Social Security 22.0%
• Medicare 14.0%
• Medicaid 7.0%
• Interest on Debt 6.0%
• Defense Spending 18.0%
• Homeland Security 1.0%
• Education 2.0%
• Other 26.0
• Total 100.0%
46% of Budget
24% of Budget
THANK YOU!
US Demographics
• America’s population is aging– smaller young (echoboomer) generation
– Babyboomers beginning to retire
– By 2040 1 in 4 Americans will be over 65
• Average life span has risen– 77 years men, 81 years women
– why: advances in medical technology, nutrition, etc…
• This FACT ensures that entitlement spending will increase a rapidly growing rate
Entitlement Spending• Includes- Social Security, Medicare & Medicaid
– Citizens are “entitled” to benefits at 65 years of age
• Largest part of Government budget– Consumes approximately 40% of budget in 2011!
• Projected to 60%-70% by 2040!
Wake-Up Call Video
https://www.youtube.com/watch?v=hsUdK70Jtmc
Not Enough Workers?• The ratio of workers to retirees is falling
– This means less money coming in => more going out
Deficit & Debt relative to GDP
• Current Deficit = $649 Billion (2016 numbers)
• Current Debt = $20.4 Trillion• Current GDP = $19.0 Trillion
• Deficit as % of GDP = 3.4% of GDP– Highest since World War II– Recent high (1983) 6% of GDP
• Debt as % of GDP =107.0% of GDP– Highest ever (1946) was 120% of GDP
NATIONAL DEBT AS % OF GDP
Debt:17.9 Trillion
GDP17.5 Trillion
102 % GDP
.
Growth of Entitlements
*Current services estimate.
Source: Budget of the United States Government, FY 2005, Office of Management and Budget.
Defense Social Security
Net interest
Medicare & Medicaid
All other spending
1964 1984 2004*
9% 19%
. .