TEKS 113.31(d)(14), Social Studies (Economics)
Subject: Economics – High School
TEKS 113.31(d)(14)
Summary of TEKS 113.31(d)(14)
TEKS 113.31(d)(14) explains how fiscal policy affects the economy at local, state, and national levels. Taxes provide essential funding for services, the federal budget outlines how money is spent, and fiscal policy decisions shape economic growth and stability.
Key Concepts of TEKS 113.31(d)(14)
- Types of Taxes: Property, sales, income, and corporate taxes fund services and infrastructure at different levels of government.
- Federal Budget: Divided into revenues (income taxes, payroll taxes) and expenditures (mandatory spending, discretionary spending).
- Impact of Fiscal Policy: Changing taxes and spending affects economic growth, public services, and national debt.
Section 1: Types of Taxes and Their Economic Importance
TEKS 113.31(d)(14)(A)
Explanation: Governments at the local, state, and national levels collect taxes to fund public services and infrastructure. Each type of tax plays an essential role in the economy.
Local Taxes
- Property Tax: Based on the value of land or buildings. It funds schools, police, fire departments, and local services.
- Example: Homeowners pay property taxes to support their community.
- Sales Tax: A percentage added to the price of goods and services. It funds local infrastructure and public services.
- Example: Buying a $10 item with a 5% sales tax costs $10.50.
State Taxes
- Income Tax: Some states tax people’s earnings to fund state programs.
- Example: Texas does not have a state income tax, but California does.
- Sales Tax: Used to fund education, transportation, and healthcare at the state level.
National Taxes
- Federal Income Tax: Collected from individuals and businesses to fund national programs like defense and Social Security.
- Example: A portion of every paycheck is withheld for federal income taxes.
- Corporate Tax: Paid by businesses on their profits.
- Example: Corporations contribute to federal revenue, which helps fund infrastructure projects.
Key Idea: Taxes at every level are essential for funding services that support communities and the economy.
Section 2: Revenues and Expenditures in the U.S. Federal Budget
TEKS 113.31(d)(14)(B)
Explanation: The federal budget is a plan for how the government collects and spends money. It is divided into two main parts: revenues (income) and expenditures (spending).
Revenues
- Individual Income Taxes: The largest source of federal revenue.
- Payroll Taxes: Funds Social Security and Medicare.
- Corporate Taxes: Taxes on business profits.
Expenditures
- Mandatory Spending: Programs required by law.
- Examples: Social Security, Medicare, and Medicaid.
- Discretionary Spending: Programs chosen by Congress annually.
- Examples: Defense, education, and infrastructure.
- Interest on Debt: The government pays interest on borrowed money.
Example of Budget Balancing
If revenues are less than expenditures, the government runs a deficit and borrows money. Surpluses occur when revenues exceed expenditures.
Key Idea: The federal budget balances income from taxes with spending on essential services and programs.
Section 3: How Fiscal Policy Decisions Impact the Economy
TEKS 113.31(d)(14)(C)
Explanation: Fiscal policy decisions, like changing taxes or government spending, have direct effects on the economy:
Increasing Taxes
- Impact: Reduces people’s disposable income but increases government revenue.
- Example: Higher taxes might slow consumer spending but fund more public projects.
Decreasing Taxes
- Impact: Puts more money in people’s pockets but reduces government revenue.
- Example: Tax cuts can boost spending and economic growth but may lead to budget deficits.
Increasing Government Spending
- Impact: Creates jobs and stimulates economic growth but can increase national debt.
- Example: Building highways creates construction jobs and boosts transportation efficiency.
Decreasing Government Spending
- Impact: Reduces national debt but might slow economic growth.
- Example: Cutting funding for public programs can save money but might hurt vulnerable populations.
Key Idea: Fiscal policy decisions balance economic growth, government revenue, and public needs.