2.03 Sharing with Uncle Sam – Flashcards
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as income rises, refers to whether the proportion of income to taxes increases, decreases, or stays the same
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progressivity
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paid through an intermediary for rights, privileges, or activities; example of this is sales tax
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indirect taxes
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paid straight to the government; example of this is income tax
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direct taxes
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keeping a portion of wages in anticipation of taxes owed
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withhold
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the federal agency that carries out the tax laws, including tax collection
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IRS (Internal Revenue Service)
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Pie might get bigger or smaller but the slice for taxes stays the same, in this case 25%. For example: flat tax.
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Proportional
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As the pie gets bigger, the slices get smaller. For example: A five percent sales tax on televisions decreases as a portion of income when your total income increases. You pay the same price for the television.
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Regressive
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As the pie gets bigger, the slices get bigger. For example: In 2008, the United States government charged 10% in income tax for people earning the least money and up to 35% for those earning the most income.
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Progressive
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Which federal income tax system do you think is used in the United States?
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The United States' federal income tax is a progressive tax plan. So the more money you make, the more you share with Uncle Sam.
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True or False: Taxes are payments for the services that government provides.
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True
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Reasons why U.S. have Progressive income tax
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pay assume more responsibility for the cost of Gov, and helps ease concerns over distribution of wealth
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True or False: Income Distribution depends with wealth. For example, the rich have more money than they need but the poor depended on the government.
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True
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proportional income tax system
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Flat tax
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income < $100,000. No need or wish to itemize tax deduction.
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1040EZ
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income <$100,000. Itemize deductions but not as thoroughly.
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1040A
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longest form but covers all tax situations
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1040
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under age 19 at the end of the year or 24 if full-time student, live with parent or guardian more than half the year, and you don't provide > than half of your own financial support of the year
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Dependant
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discount to your required tax payment occurring for variety of reasons
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Itemized deduction
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tax percentage that applies to the last dollar of income earned
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marginal tax rates
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amount of income subject to income tax under the law after deductions and credits
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taxable income
