TRUE or FALSE question TAXES AND SPENDING Article I of the U.S. Constitution empowers Congress “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.” Up until 1915, however, the federal government collected few taxes and spent little. In 1902, the federal government employed fewer than 350,000 people and spent a mere $650 million. Today, the federal government employs over 4 million people and spends more than $3.5 trillion a year.                 The tremendous expansion of the federal government started with the Sixteenth Amendment to the U.S. Constitution (1913), which extended the government’s taxing power to incomes. Prior to that, most government revenue came from taxes on imports, whiskey and tobacco. Once the federal government got the power to tax incomes, it had the revenue base to finance increased expenditure.                 Today, the federal government collects nearly $3 trillion a year in tax revenues. Nearly half of that revenue comes from individual income taxes. Social security payroll taxes are the second-largest revenue source, followed at a distance by corporate income taxes. The customs, whiskey and tobacco taxes on which the federal government depended in 1902 now count for very little.                 In 1902 federal government expenditures mirrored tax revenues: Both were very small. Today things are very different. The federal government now spends all of its much larger tax revenues – and more. Uncle Sam even borrows additional funds to pay for federal spending. Chapter 12 (of the Schiller textbook) examines the implications of the budget deficits that help finance federal spending. In chapter 11, the Schiller textbook focuses on how government spending directly affects aggregate demand (or, the total demand from household, business, government and foreign sectors of the economy). [Schiller, Bradley R. The Macro Economy Today. New York: McGraw-Hill/Irwin, 2010, 225.] ********************* Question:  After reading the above text, would you consider the below statement TRUE or FALSE? Statement: The U.S. federal government today collects less taxes, spends less, and employs fewer people, than it did before the end of World War I in 1918. --True   --False

TRUE or FALSE question

TAXES AND SPENDING

Article I of the U.S. Constitution empowers Congress “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.” Up until 1915, however, the federal government collected few taxes and spent little. In 1902, the federal government employed fewer than 350,000 people and spent a mere $650 million. Today, the federal government employs over 4 million people and spends more than $3.5 trillion a year.

                The tremendous expansion of the federal government started with the Sixteenth Amendment to the U.S. Constitution (1913), which extended the government’s taxing power to incomes. Prior to that, most government revenue came from taxes on imports, whiskey and tobacco. Once the federal government got the power to tax incomes, it had the revenue base to finance increased expenditure.

                Today, the federal government collects nearly $3 trillion a year in tax revenues. Nearly half of that revenue comes from individual income taxes. Social security payroll taxes are the second-largest revenue source, followed at a distance by corporate income taxes. The customs, whiskey and tobacco taxes on which the federal government depended in 1902 now count for very little.

                In 1902 federal government expenditures mirrored tax revenues: Both were very small. Today things are very different. The federal government now spends all of its much larger tax revenues – and more. Uncle Sam even borrows additional funds to pay for federal spending. Chapter 12 (of the Schiller textbook) examines the implications of the budget deficits that help finance federal spending. In chapter 11, the Schiller textbook focuses on how government spending directly affects aggregate demand (or, the total demand from household, business, government and foreign sectors of the economy).

[Schiller, Bradley R. The Macro Economy Today. New York: McGraw-Hill/Irwin, 2010, 225.]

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Question:  After reading the above text, would you consider the below statement TRUE or FALSE?

Statement: The U.S. federal government today collects less taxes, spends less, and employs fewer people, than it did before the end of World War I in 1918.