ECONOMIC POLICYMAKING

ECONOMIC POLICYMAKING

Who controls the Economy today?

The

President

AND

Congress!

The Federal Economy

The President The Congress

1921 Budget & 1921- Congress hands over Accounting Act the reigns to the President

to prepare the budget

CEA- Council of Economic Advisors

(3 members)

OMB- Congressional Budget Office of Management & Budget & Impoundment Act 1974 (over 500 workers)

CBO- Congressional Budget Office

Market vs. Non Market Economies

ADAM SMITHGovernment keep your hands out of

Business!

• ADAM SMITH

LAISSEZ FAIRE

JOHN MAYNARD KEYNES

• We can control the Economy!

• Aggregate Demand can be controlled

through Monetary and Fiscal means.

FISCAL POLICIES

SPENDING

&

TAXING

MONETARY POLICIES

Money Supply

&

Interest Rates

The Federal Reserve

Established 1913

7 Members all appointed by the presidentin office

14 yr. Tenure

Federal Chairman BEN BERNANKE

TAXES WE PAY

Property- pays for education, police, and fire protection

Excise- ex: gasoline tax

Personal- tax on your income

Sales Tax- State and Local OH= 6% Geauga County- 6.5%

Cuyahoga County- 7.5%

TAXES WE PAY

Payroll Taxes- Social Security, Medicare etc.

Licenses-

Social Insurance- Social Security

User Fees- turnpike tolls

Ohio’s State Income Taxes• How Ohio State income tax rates are structured The tax table below will show in detail the

Ohio state income tax rates by income tax brackets).

• There are 9 income tax brackets for Ohio.

• If your income range is between $0 and $5,000, your tax rate on every dollar of income earned is 0.587%.If your income range is between $5,001 and $10,000, your tax rate on every dollar of income earned is 1.174%.If your income range is between $10,001 and $15,000, your tax rate on every dollar of income earned is 2.348%.If your income range is between $15,001 and $20,000, your tax rate on every dollar of income earned is 2.935%.If your income range is between $20,001 and $40,000, your tax rate on every dollar of income earned is 3.521%.If your income range is between $40,001 and $80,000, your tax rate on every dollar of income earned is 4.109%.If your income range is between $80,001 and $100,000, your tax rate on every dollar of income earned is 4.695%.If your income range is between $100,001 and $200,000, your tax rate on every dollar of income earned is 5.451%.If your income range is $200,001 and over, your tax rate on every dollar of income earned is 5.925%. Income tax brackets data last updated March 3rd, 2009.

2008 Tax Bracketsfor Single Taxpayers

2008 tax rates and brackets

These tables can help you estimate your tax bill

For single taxpayers

If taxable income is at least . . . But not more than . . . Your tax is:

$0 $8,025 10% of the amount over $0

$8,026 $32,550 $802.50 plus 15% of the amount over $8,025

$32,551 $78,850 $4,481.25 plus 25% of the amount over $32,550

$78,851 $164,550 $16,056.25 plus 28% of the amount over $78,850

$164,551 $357,700$40,052.25 plus 33% of the amount over

$164,550

$357,701 No limit$103,791.75 plus 35% of the amount over

$357,700

2008 Tax Brackets for Married Couples

For married couples filing jointly*

If taxable income is at least . . . But not more than . . . Your tax is:

$0 $16,050 10% of the amount over $0

$16,051 $65,100 $1,605 plus 15% of the amount over $16,050

$65,101 $131,450 $8,962.50 plus 25% of the amount over $65,100

$131,451 $200,300 $25,550 plus 28% of the amount over $131,450

$200,301 $357,700 $44,828 plus 33% of the amount over $200,300

$357,701 No limit $96,770 plus 35% of the amount over $357,700

* Or qualifying widow or widower

2008 Tax Brackets for Heads of Household

For heads of households

If taxable income is more than . . . But not more than . . . Your tax is:

$0 $11,450 10% of the amount over $0

$11,451 $43,650 $1,145 plus 15% of the amount over $11,450

$43,651 $112,650 $5,975 plus 25% of the amount over $43,650

$112,651 $182,400 $23,225 plus 28% of the amount over $112,650

$182,401 $357,700 $42,755 plus 33% of the amount over $182,400

$357,701 No limit $100,605 plus 35% of the amount over $357,700

STATE TAXES ON INDIVIDUALSSee document in Ch. 18 folderSEE My Pay Stub--- in ch. 18 folder

See ch. 18 folder for Receipts and Outlays 2004

Figure 18.2

Federal Spending in 2011, by Function

20

TARP

Troubled Asset Relief Programs

Passed in 2008 by President Bush

American Recovery and Reinvestment Act

(ARRA) 2009February 13 ARRA was passed by both the House and Senate .

Originally intended to be a bipartisan bill, the passage of the bill was largely along party lines. No Republicans voted for it in the House& three moderate Republicans voted for it in the Senate Collins and Snowe of Maine and Specter of PA.

The bill combined TAX BREAKS with spending on INFRASTRUCTURE Projects, extension of welfare benefits, and education. The final cost of the bill was $787 billion, and almost $1.2 trillion with debt service included.

President Obama signed the Act into law on February 17, 2009.