1. 7C SOURCES OF GOV’T
REVENUE
8A GOODS/SERVICES
PROVIDED BY THE GOV’T
8E TAXES FUND GOV’T
SERVICES
EPF7 demonstrate knowledge of how
monetary and fiscal policy influence
employment, output and prices
EPF8 demonstrate knowledge of the role of
govt in a market economy

2. Sources of Gov’t Revenue
 Federal, state, and local governments collect
taxes and fees to pay for the goods and
services they provide.

3. What is the source of revenue
for local governments?

4. Local Gov’t Revenue Source
 Most local governments depend primarily on
property taxes.

5. What is the source of
revenues for state
governments?

6. State Gov’t Revenue Source
 Most state governments depend on sales and
income taxes.

7. What is the source of revenue for
the federal government?

8. Federal Gov’t Revenue Source
 The federal government gets the largest
percentage of its revenue from individual
income taxes.
 Other sources include :
 payroll taxes for Social Security and Medicare
programs (i.e., Federal Insurance Contributions Act –
FICA)
 corporate income taxes
 excise taxes (e.g., tax on cigarettes and alcohol)
 fees (e.g., park entrance fees)
 tariffs (i.e., taxes on certain imports, such as steel and
sugar, for the purpose of protecting domestic

9. Goods/Services provided by
gov’t
 Governments may provide an alternative
method to supply goods and services when
the benefits to society of doing so
outweigh the costs to society.

10. What are some of the goods and
services provided by the
government?

11. Goods and Services Provided By
The Gov’t
The government provides goods and services
such as
 military protection
 street lights
 police protection

12. What are these goods and
services not provided by the
private market?

13. Why not provided by private
market?
 Though schools, roads, and fire protection can be
provided by the private sector, the government
generally provides them as these services
benefit society as a whole.
 An educated public benefits the whole society.
 Roads facilitate trade.
 If one person’s house burns and the fire department
refuses to come due to nonpayment, neighboring houses
may also catch fire.
 These goods and services may not be provided by
the private sector because it would not be
profitable for them to do so when non payers

14. Taxes & fees fund gov’t
services
 Governments pay for the goods and services
they provide by taxing or borrowing from
people.

15. What types of goods and services
does the federal gov’t provide,
and what are the sources of its
revenue?

16. Federal Spending & Revenues
The bulk of federal spending goes toward
 national defense
 payments to Social Security recipients
 the costs of goods and services, medical
expenditures (i.e., Medicare and Medicaid)
 interest payments on the national debt.
Most federal tax revenue comes from federal
income tax and payroll taxes.

17. What types of goods and services do
the state and local gov’ts
provide, and what are their sources of
revenue?

18. State & Local Gov’t Spending &
Revenues
 The bulk of state and local government revenue
is spent on
 public education
 public welfare,
 road construction and repair
 public safety
 Most state and local government revenues
come from
 sales taxes
 grants from the federal government
 personal income taxes
 property taxes