Standards for Who Bears the Burden When a Tax Is Imposed on a Good?

Standard: 18

Name: Fiscal Policy and Taxation

Fiscal policy refers to government taxation and spending decisions. The federal government’s budget policy influences the overall levels of employment, output, and prices. Taxation impacts the behaviors and circumstances of individuals and businesses.

• 6-8: Middle school students learn the sources of government revenues and how those revenues are spent.
• 9-12: High school students learn about how changes in fiscal policy affect the spending of consumers and producers and therefore influence the economy. Various types of taxes are introduced as well as the concept of tax progressivity. Finally, the funding of federal budget deficits is described.Benchmark Students will know that: Students will use this knowledge to: 18.M.1 Most federal government tax revenue comes from personal income and payroll taxes. Additional revenue sources include corporate taxes, excise taxes, and other taxes.Use U.S. federal budget data from the Congressional Budget Office to construct a pie chart depicting major categories of federal revenue and discuss why most revenue comes from income and payroll taxes. Explain why federal tax revenues increase when the economy expands. 18.M.2 Payments to Social Security recipients, the costs of national defense and homeland security, medical expenditures (such as Medicare), transfers to state and local governments, and interest payments on the national debt constitute the bulk of federal government spending.Use data from the U.S. federal budget to construct a pie chart depicting the major categories of federal expenditures. Explain why federal government expenditures decrease when the economy expands. 18.M.3 Although the sources of revenue vary greatly by state, typical sources of state and local government revenues include sales taxes, grants from the federal government, personal income taxes, and property taxes.Identify the various sources of state and local revenues and various categories of state and local expenditures in their state. 18.M.4 The bulk of state and local government revenue is spent on education, public welfare (including hospitals and health), road construction and repair, and public safety.Describe local government services that are used by the residents of their community and explain where the funds come from to pay for those services.M: MIDDLE SCHOOL STUDENTS National Content Standards in K–12 Economics | 61 Standard 18: Fiscal Policy and Taxation

Standard: 4

Name: Markets

The interaction between buyers and sellers determines the market price and allocates scarce goods and services. Buyers and sellers make decisions based, in part, on market prices.

• K-5: Elementary school students learn that markets determine the prices of goods and how people change their behavior when prices change.
• 6-8: In middle school, students are formally introduced to the concepts of supply and demand and what is meant by an equilibrium price. They are presented with a situation where the market price is not in equilibrium and learn how equilibrium is restored. Finally, they discover that a change in the price of one good can impact the market for another good.
• 9-12: In high school, students learn about shortages and surpluses, and how supply and demand changes impact the market price. Finally, the concept of the price elasticity of demand is introduced.Benchmark Students will know that: Students will use this knowledge to: 4.E.1 A market exists whenever buyers and sellers exchange goods or services.Identify items they purchased in online marketplaces and at a local market (e.g., grocery store or school fair) and describe the differences between digital and physical markets. 4.E.2 A price is what people pay when they buy a good or service, and what they receive when they sell a good or service.Identify one of their favorite items purchased with their own money and what price they paid, or what they charged when working for others (e.g., chores around the house, yard work for a neighbor). 4.E.3 Higher prices for a good or service provide incentives for buyers to purchase less of that good or service, and for producers to make or sell more of it. Lower prices for a good or service provide incentives for buyers to purchase more of that good or service, and for producers to make or sell less of it.Provide an example of a good that they did not purchase (or their parents or caregivers would not purchase for them) because it was too expensive and predict how low the price would have to drop before they would be able to buy it. Decide if they would take out the garbage, babysit a sibling, or do some other chore for $1 and, if not, decide at what price they would be willing to do the chore.E: ELEMENTARY STUDENTS National Content Standards in K–12 Economics | 20 Standard 4: Markets

Standard: 7

Name: Role of Government

Governments intervene in markets for a variety of economic reasons, including improving competition; providing public goods, like national defense; controlling pollution; defining and enforcing property rights; and helping those in need.

• K-5: Elementary school students learn that governments tax or borrow money to pay for goods and services that they provide to society.
• 6-8: Middle school students learn that taxes or subsidies might affect the output of goods and services.
• 9-12: High school students learn that governments pursue different economic goals and that policymaking often requires trade-offs among the goals. High schoolers are given examples of how government policies are used to encourage competitive markets, and how governments can correct for externalities or public goods. Finally, students learn that governments may pursue goals other than correcting inefficiencies, for example, redistributing income. The impact of economic policies is then examined, noting that sometimes the cost of an intervention may exceed the benefits, and those who construct policies may not be incentivized to create optimal policies.Benchmark Students will know that: Students will use this knowledge to: 7.E.1 Governments often provide certain kinds of goods and services in a market economy.Brainstorm a list of goods and services (such as police protection, upkeep of roads, parks, etc.) not usually privately produced. 7.E.2 Governments pay for the goods and services they use or provide by taxing or borrowing.Explain how a local school district would raise the money to pay for a new elementary school.E: ELEMENTARY STUDENTS