Analyze the Econ Ch 14 Essay – Flashcards
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Revenue
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Income received by government
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Tax base
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Income, property, good, or service that is subject to tax
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Progressive tax
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A tax in which percentage paid increases as income increases
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Incidence of a tax
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Final burden of a tax
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Equity
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One characteristic of a good tax
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Regressive tax
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A tax in which the percentage paid decreases as income increases
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What gives the U.S. gov the right to collect taxes
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Constitution
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Under a proportional tax, how is income related to percentage of income taxed
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Income goes up percentage taxed stays the same
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How is tax assessed according to the benefits-received principle
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Those who pay the tax receive the benefits the tax provides
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In which of the following goods or services might a tax increase be hardest to pass
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Anything that isn't necessary (car washes)
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Medicare
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National health insurance plan for people over 65
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Personal exemption
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A set amount that can be subtracted from a persons gross income
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Withholding
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Taking out a part of income as it is earned for taxes
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Tax incentive
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The use of taxes to influence behavior
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Tariff
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Tax on imported goods
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Tax deduction
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An amount that can be used by taxpayers to reduce taxable income
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What is the main purpose of federal taxes on tobacco and alcohol products?
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To discourage the use of these products
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What makes the federal income tax a progressive tax?
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The higher the income a person has, the higher the percentage that person pays in tax
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Who pays unemployment taxes?
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Employers
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What is the difference between estate tax and a gift tax
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Estate tax is paid on the assets of someone who died, gift tax is paid on assets given by one living person to another
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Entitlement
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Social welfare programs from which people benefit of they meet certain eligibility requirements
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Discretionary spending
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Money lawmakers have a choice about spending
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Social security
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Benefits paid to retired and disabled workers
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Medicaid
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Medical benefits for low-income families
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Unemployment compensation
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Benefits paid to unemployed workers for a limited period of time
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Mandatory spending
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Money lawmakers are required to spend on certain programs
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What is an example of a spending loan?
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Veterans pensions
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What is one reason the government has limited control over spending
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As more people qualify for an entitlement program, spending increases
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What is a "means-tested" program?
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One for which those with higher incomes receive lower or no benefits
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Why are social security and Medicare spending expected to increase
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The baby boomer generation will qualify for both programs
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Balanced budget
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Situation in which spending is equivalent to revenue
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Capital budget
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Spending for major investments such as roads
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Real property
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Assets such as land and buildings
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Operating budget
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Spending for day to day expenses
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Personal property
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Assets such as furniture, boats, and jewelry
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Tax exempt
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Cannot be taxed
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What is the major so cute of revenue for most state governments
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Sales and individual income taxes
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How do most states finance their capital budget
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Long term borrowing or sale of bonds
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What are main sources of revenue for local governments
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Property taxes
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For which expense do state governments generally provide financial help to their local governments
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Public school systems
