Term
resource allocation
consumer behavior
productivity/growth |
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Definition
| how do taxes affect the economy? (3 things) |
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Term
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Definition
| a high tax designed to raise revenue and reduce consumption of a socially undesirable product (liquor or tobacco) |
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Term
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Definition
final burden of the tax.
can be predicted with help of supply and demand analysis |
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Term
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Definition
| what criteria do taxes have to meet to be effective? (3 things) |
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Term
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Definition
tax on peoples earnings.
An example of a complex tax |
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Term
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Definition
| exceptions or oversights in tax law that allow some people to avoid paying taxes |
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Term
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Definition
| general tax levied on most consumer purchases |
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Term
benefit principle
ability to pay principle |
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Definition
| What two principles are taxes based on? |
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Term
benefits are hard to measure
greatest benefits to those who can least afford to pay for them |
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Definition
| what are two limitations of the benefit principle? |
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Term
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Definition
| belief that people should be taxed according to their ability to pay, regardless of the benefits they recieve |
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Term
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Definition
| those who benefit from government good and services should pay in proportion to the amount of benefits they recieve |
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Term
socieities cannot always measure benefits derived from government spending
assumes people with higher incomes suffer less discomfort paying taxes than people with lower incomes |
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Definition
| What two factors is the ability to pay principle based on? |
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Term
proportional
progressive
regressive |
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Definition
| What are the three general types of taxes in the US? |
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Term
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Definition
| imposes the same percentage rate of taxation on everyone, regardless of income |
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Term
| total taxable income / total income |
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Definition
| How is the average tax rate calculated? |
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Term
| constant, regardless of income |
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Definition
| If the percentage tax rate is constant, than the average tax rate is ___________ |
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Term
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Definition
| If a person's income goes up, the percentage of total income paid in taxes __________ |
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Term
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Definition
| tax that imposes higher percentage rate of taxation on persons with higher incomes |
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Term
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Definition
tax rate that applies to the next dollar of taxable income.
used in Progressive taxes. |
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Term
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Definition
| progressive taxes ___________ as taxable income increases |
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Term
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Definition
| tax imposes a higher percentage rate of taxation on low incomes than high incomes |
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Term
| payroll withholding system |
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Definition
| system requires an employer to automatically deduct income taxes from an employers paycheck and send it directly to the government |
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Term
| Internal Revenue System (IRS) |
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Definition
| branch of the US treasury department in charge of collecting taxes |
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Term
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Definition
| annual report to the IRS summarizing total income, deductions and taxes withheld by employers |
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Term
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Definition
| What kind of tax is individual income tax? |
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Term
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Definition
| upward revision of tax brackets to keep workers from paying more taxes just because of inflation |
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Term
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Definition
| Federal Insurance Contributions Act tax levied on employers and employees to pay for SS and Medicare |
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Term
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Definition
| taxes deducted from your check. (SS and Medicare) |
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Term
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Definition
| tax a corporation pays on its profits |
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Term
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Definition
tax on manufacture or sale of selected items, such as gasoline and liquor.
fourth largest source of federal government revenue. |
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Term
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Definition
| demand for an economic product rises faster than income when income grows |
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Term
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Definition
| tax on donations of money or wealth and is paid by the person who makes the gift |
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Term
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Definition
| charge levied on goods brought in from other countries |
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Term
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Definition
| charges levied for the use of a good or service |
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Term
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Definition
| part of the economy made up of federal, state and local governments |
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Term
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Definition
| part of the economy made up of private individuals and privately owned businesses |
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Term
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Definition
payment for which government recieves neither goods or services in return
(SS, welfare,unemployment,aid for disabilities) |
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Term
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Definition
transfer payment one level of government makes to another
(interstate highway construction programs) |
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Term
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Definition
| way in which income is allocated among families individuals or other groups of the economy |
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Term
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Definition
| spending in excess of revenues collected |
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Term
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Definition
| total amount borrowed from investors to finance governments deficit spending |
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Term
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Definition
| annual budget in which expenditures=revenues |
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Term
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Definition
| special accounts used to fund specific types of expenditures such as SS and medicare |
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Term
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Definition
| higher than normal interest rates that heavy government borrowing causes |
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Term
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Definition
| requirement that new spending proposals or tax cuts must be offset by reductions elsewhere |
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Term
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Definition
| power to cancel specific budget items without rejecting the entire budget |
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Term
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Definition
| legal limitations on annual discretionary spending |
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Term
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Definition
| broad social programs that use established eligilbity requirments to provide health, nutritional or income supplements to individuals |
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Term
| changes incentives to save, work and invest |
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Definition
| how do taxes affect productivity and growth? |
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Term
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Definition
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Term
| how does government spending affect resource allocation? |
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Definition
| stimulates economic activity |
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Term
| What does government spending influence? |
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Definition
| distribution of income of familes groups and individuals |
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Term
| Who does the government(public sector) compete with? |
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Definition
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Term
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Definition
| cost of next best alternative use of money/time over another choice |
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Term
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Definition
| extra cost of producing one additional unit of production |
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