lects a tax on the amount of income left over to be spent on themselves (which it calls their "net taxable income"). A person or company with a large taxable income has to pay at a higher tax rate than one with a small income. Persons with very small incomes do not have to pay any tax. A man who is supporting a wife and children does not have to pay as large an income tax as another man who has the same income but who has no family or dependents to support.

(2) The Government collects large amounts of money as inheritance tax. This is a tax charged against persons who receive money or property from the estates of relatives or friends who have died. It also collects a tax on any large gifts of money or property which living people give to one another.

(3) Large amounts of money come to the Government from taxes on the manufacture and sale of liquors, cigarettes, tobacco, matches, chewing gum, playing cards, firearms, cosmetics, and drugs; also on food, such as certain kinds of butter and cheese; also on the sale of gasoline.

(4) By the operation of the tariff laws, the Government collects customs duties (a kind of tax) on many different kinds of goods which are brought into the United States from foreign countries.

(5) People have to pay a tax on such things as the transfer of stocks and bonds, and on theater tickets and club dues.

(6) Business corporations have to pay a tax on the value of their capital stock.

(7) To pay part of the cost of Social Security Insurance (money set aside by the Government to pay special benefits to (1) wage earners who have retired from employment because of old age or disablement; or (2) wage earners who are unemployed; or (3) the widows or children of wage earners who have died), the Government charges a tax against pay rolls of employers in many industries.

(8) The sale of Government property also brings some money to the Government.

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(9) The Federal Government receives the tolls paid by ships passing through the Panama Canal.

(10) Sometimes sums of money are paid to our Government by foreign governments who owe us money.

These are not all of the sources from which our Federal Government gets its funds. But they give us an idea of its sources of revenue. You will recall that the Treasury Department is in charge of receiving and paying out the Government's money, and must report all such transactions to the Congress.

WHERE DO THE STATES GET THEIR MONEY?

Like the National Government, the State Governments receive funds from a number of sources.

(1) Many of the States require persons living within their borders to pay an income tax. This tax is like the Federal income tax which we have just described.

(2) A State property tax is another way by which many States raise money. This is a tax against the value of land and buildings, and of furniture, equipment, and other forms of wealth. If you turn back to page 182 you may read how these property taxes are determined and collected.

(3) Nearly all of the States collect an inheritance tax against the property of their own people when they die. Because the State does many services to protect the property of dead persons and to help in passing it on to their legal heirs, its laws often assess high taxes against large estates.

(4) Some of the States have a business tax (sometimes called corporation tax). This is a tax on the earnings of business concerns.

(5) A very general form of State tax is known as a franchise tax and is charged against private companies such as railroads, streetcar and bus companies, electric and gas companies whose business requires that they shall use public highways or other public property.

(6) Every one who travels in an automobile knows that

there is a gasoline tax collected by each State. You will remember that there is also a Federal tax on gasoline. So we pay both State and Federal taxes when we "get a fill of gas."

(7) Nearly all States collect license fees from owners and operators of automobiles, trucks, busses, and motorcycles. They also charge license fees for the right to sell liquor, cigarettes, tobacco, and other articles. Sometimes they charge a tax on theater tickets and other luxuries.

(8) Some money comes to the State as fees for recording legal documents, such as mortgages and deeds. A small charge is made for these services. Fees (sometimes called tolls) are collected at some docks, canals, bridges, and ferries which are operated by the State governments.

(9) Every State collects fines, which are sums of money assessed by law courts against persons convicted of breaking the law.

(10) Some States collect a small poll tax (sometimes called a head tax) from all those qualified to vote in the State.

(11) Many of the States collect a sales tax. This is a small amount paid on almost everything sold in the State. It is usually paid by the buyer as part of the price of an article, but the seller is held responsible for paying it to the State.

(12) Sometimes there is a tax called a special assessment. This is charged against land and buildings to help pay for paving, sewers, or other improvements which will increase the value of such land and buildings.

(13) The State may receive money from the Federal Government to be spent for agreed purposes, such as roads, bridges, and certain other improvements; or for grants-inaid.

WHERE DO THE LOCAL GOVERNMENTS GET THEIR MONEY?

You have learned that the county, town, and city governments perform many services for us. They must have

money with which to do these things. Some sources of their money are:

(1) General property taxes charged against property (land, buildings, furniture, machinery, etc.). This tax is often shared by the local government and the State.

(2) Licenses (permits) to automobile drivers, hunters, fishermen, dog owners and others; also marriage licenses. (3) Licenses to sell liquor, cigarettes, or other articles, or to operate places of amusement.

(4) Franchises to private business companies, such as street-railway companies, telephone and telegraph companies, and gas, water, and electric companies which use the streets and alleys.

(5) Taxes on the earnings of local public-service corporations, such as waterworks, electric-light companies, gas companies, etc.

(6) Fines collected from those who break the law. (7) Grants from the State government for education, road building, etc.

(8) Special taxes (often called assessments) from those who will receive some special benefit from a public improvement.

Everybody is really paying taxes in one way or another, either directly or indirectly. A person who rents rooms in a landlord's house is really helping to pay a land tax. If there were no land tax, the landlord could get along with lower rent. The wage earner in an industry which must carry old-age or unemployment insurance under the social-security laws might have a higher wage if money were not being set aside, through a pay-roll tax, for his protection. When we buy at stores, we find in some States that we have to pay a sales tax; but in all States we are helping, by the price we pay, to supply the earnings on which the storekeeper must pay income and other tax. Therefore, all the people of the country are indirectly taxpayers and are paying for the services of their Government. They should be interested in knowing whether tax money is wisely spent by the Government.

WORK PROJECT

Talk with your neighbors about the kind of taxes paid by the people of your community. Try to decide whether they are local (county, city, or town), State, or Federal. Then complete the chart below.

Now consider some of the things in your community, State, and Nation that you get for your taxes, and complete the chart below.

THINGS WE GET FOR OUR TAXES

Work Project: Taxes and Things We Get for Our Taxes