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Finance: What's the Difference Between Federal and State Taxes? 145 Views
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What is the difference between federal and state taxes? Federal taxes: the whole country. Taxes for national defense, interstate roadways, national parks, etc. State taxes: local. Think: smaller roads, schools, local parks, etc. And gas taxes lean both ways.
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Transcript
- 00:02
Finance, a la Shmoop. [title page] What's the difference between federal
- 00:07
and state taxes? All right, well, when the U.S. came together a quarter of a
- 00:13
millennium ago, it was the United States. See, right there in the title you get a [founding fathers pictured]
- 00:19
sense of the tension. We started out as just states. These things. Then, we came together [individual states on map]
- 00:27
and created a central government that kind of sort of had control over each of [government tries to control states]
Full Transcript
- 00:31
the states, and well, you can imagine that not everyone agreed about every rule.
- 00:36
Some states wanted murder to be an offense punishable by death, while other [protesters picket]
- 00:41
states wanted it to be, you know, legal. Well, okay maybe not legal, but they
- 00:46
had different ideas about how you should deal with murderers... i.e., not all of them [person pushed into lion pit]
- 00:49
should be thrown into the lion pit. Anyway, this was all well and good when it just
- 00:54
involved local laws and customs. Local customs dictated local laws, and then
- 01:00
local taxes could be allocated accordingly. So they could pay for things [local laws and taxes diagram]
- 01:05
like a bouncy house for the mayor. But what happened when there was a threat of [mayor in bounce house]
- 01:09
military invasion? Well, what if Georgia wanted to fight
- 01:13
them commies, but North Carolina didn't? Yeah, that didn't work out so well. So [states argue over military]
- 01:18
for some things, there has to be a federal law that supersedes state law
- 01:23
and federal taxes that support those laws, like military spending. If only those [federal laws and taxes diagram]
- 01:28
pacifists in Maryland didn't want to spend money on guns, well, then what would
- 01:32
the rest of the country do? Yep, let Maryland start speaking Russian or [Maryland hippies hang out]
- 01:36
Chinese as the preferred language while the rest of the nation just watched [Maryland conquered]
- 01:39
while sipping their tea? Or in the United States' case, you know, eating doughnuts? Yeah. [Americans eat doughnuts]
- 01:44
So, military spending protects the entire country, and those expenses come out of [military budget chart]
- 01:50
federal taxes. National highways? Federal. Border Patrol? Federal. Space travel? [federal and local laws/taxes demonstrated]
- 01:57
Federal. Schools? State. Libraries? State. Little country roads? State... local.
- 02:04
You know... Or even smaller in the form of county
- 02:07
taxes as we get littler and littler... yeah. So federal taxes pay for all the big
- 02:12
stuff--the things that we share as unified Americans no matter what state
- 02:16
we live in, while state taxes pay for stuff particular interest to our little
- 02:20
local state, wherever it is. You know, like DC taxes aren't going to be used to
- 02:25
build a fire department in Minnesota. Stuff like that. [fire department in Minnesota]
- 02:27
Besides, Washington has their, you know, own fires to put out. [newscaster speaks]
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