Term
| What is a proportional tax? example? |
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Definition
| tax in which the percentage of income paid in tax is the same regardless of the level of income; if the tax rate is 20 percent, then an individual with a $10, 000 in taxable income pays 2,000 dollars in taxes and a person with a 100,000 dollars taxable income will pay 20,000 |
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Term
| What is a regressive tax? |
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Definition
| people with lower incomes pay higher taxes; the percentage of income goes down as income rises |
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Term
| What is a progressive tax? |
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Definition
| a tax that imposes a high percentage rate of taxation on higher incomes than on lower ones; percentage of income paid in tax rises as level of income rises |
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Term
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Definition
| federal insurance contributions act; levied on employers and employees to support social security and medicare |
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Term
| What does the benefit principle of taxation say? example? |
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Definition
| those who benefit from government goods and services should pay in proportion to the amount of benefits they receive; belief that taxes should be paid according to benefits regardless of income; an example of this would be gasoline taxes because those who drive more pay more gas taxes |
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Term
| What is the ability to pay principle of taxation? example? |
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Definition
| the belief that people should be taxes according to their ability to pay, regardless of the the benefits they receive; an example of this would be the individual income tax which requires people with higher incomes to pay more than those who earn less |
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Term
| What are excise taxes? example? |
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Definition
| a tax on the manufacture or sale of selected items such as gasoline and liquor |
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Term
| do excise tend to be regressive or progressive? |
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Definition
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Term
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Definition
| a tax on tangible and intangible possessions such as real estate, buildings, furniture, stocks, bonds, and bank accounts. |
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Term
| What are the three types of property taxes? |
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Definition
| real property (real estate; intangible property (legal documents); and personal property (clothes, television) |
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Term
| What are sales taxes? What goods are exempt from sales taxes? |
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Definition
| a general state or city tax levied on a product at the time of sale; food and medicine |
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Term
| What is tax incidence? inelastic demand goods are likely to fall upon the ____, elastic demand goods are likely to fall upon the ____. |
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Definition
| the final burden of the tax--who actually pays the tax; the final consumer and the final producer |
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Term
| The ____gets money from the income tax. The ____gets money from the sales tax. The ____gets money from the property tax. |
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Definition
| federal government; state; local government |
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Term
| What are transfer payments? examples? |
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Definition
| payment where the government receives neither goods nor services in return; social security or unemployment compensation |
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Term
| What are the two types of government spending? |
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Definition
| the government needs goods and services and they give wages and salaries in return for those goods and services; transfer payments are those in which the government does not get anything in return such as unemployment compensation |
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Term
| What is the federal deficit? |
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Definition
| annual government spending in excess of taxes and other revenues |
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Term
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Definition
| total amount borrowed from investors to finance the government's deficit spending |
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Term
| What is discretionary spending? example? |
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Definition
| spending that must be approved by congress in the annual budgetary process; annual defense spending must be approved by the congress |
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Term
| What is mandatory spending? example? |
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Definition
| federal spending authorized by law that continues without the need for annual approvals by Congress; spending for social security |
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Term
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Definition
| program or benefit using established eligibility requirements to provide health, nutritional, or income supplements to indivduals |
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Term
| What is the "public" portion of the national debt? |
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Definition
| the money we owe to ourselves so it is not a huge issue; however some of the public debt is owned by foreigners so it makes it more difficult for the US to have power in the economy when it comes to that debt |
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Term
| Top foreign holders of the US debt? |
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Definition
| China and Japan and the OPEC and shady carribean banks |
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Term
| What are the three major criteria for taxes? |
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Definition
| equity, simplicity, efficiency |
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Term
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Definition
| exceptions to the law that allow some people/business to get out of paying taxes |
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Term
| Taxes generally are viewed as being fairer if they have fewer _____, _____, and _____. |
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Definition
| exceptions, deductions, and exemptions |
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Term
| What is a difficult tax to understand? easy tax? |
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Definition
| individual income tax; sales tax |
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Term
| What are the two principles of taxation? |
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Definition
| the benefit principle; ability to pay principle |
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Term
| what are the two cons of the benefit principle? |
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Definition
| those who receive government servies are sometimes the ones who can least afford to pay for them; benefits are hard to measure--not just the drivers benefit from the taxes paid by gasoline |
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Term
| What are the four impacts of government spending? |
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Definition
| affects resource allocation, redistributing income, competing with private sector, and increasing the tax burden |
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Term
| What are four impacts of national debt? |
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Definition
| transferring purchasing power, reducing economic incentives, and crowding out, and redistributing income |
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