ch 9 economics – Flashcards
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capital gains
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profits from the sale of an asset held for 12 months
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incidence of tax
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the final burden of the tax
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progressive tax
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a tax that imposes a higher percentage rate of taxation on persons with higher incomes.
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16th amendment
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Amendment to the United States Constitution (1913) gave Congress the power to tax income.
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regressive tax
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a tax that imposes a higher percentage rate of taxation on low incomes than on high incomes
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tax return
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an annual report to the IRS summarizing total income, deductions, and the taxes withheld by employers
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flat tax
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proportional tax on individual income after a specified threshold has been reached
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estate tax
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tax on the transfer of property when a person dies
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excise tax
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a tax on the production or sale of a good
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payroll withholding system
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a system that requires an employer to automatically deduct income taxes from an employee's paycheck and send it directly to the government
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property tax
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tax on tangible and intangible items such as real estate, buildings, furniture, stock, bonds and bank accounts. The second largest source of revenue for local governments
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Federal Insurance Contributions Act.
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tax levied on both employers and employees to pay for Social Security and medicare
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sin tax
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relatively high tax to raise revenue and discourage consuption of a socially undesirable product
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corporate income tax
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taxes paid to the Federal government by Corporations for their profits. the third largest source of the Federal Revenue
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proportional tax
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a tax for which the percentage of income paid in taxes remains the same for all income levels
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surcharge
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additional tax above and beyond the base rate
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tax assessor
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the person who assigns value to property for tax purposes
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medicare
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a federal health-care program available to all senior citizens, regardless of income
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tax loophole
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exceptions or oversights in the tax law that allow some people and businesses to avoid paying taxes
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indexing
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an upward revision of the tax brackets to keep workers from paying more just because of inflation
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payroll tax
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taxes deducted from your paycheck
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investment tax credit
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a reduction in business taxes that are tied to investment in new plants and equipment
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individual income tax
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tax on people's earnings
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alternative minimum tax
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the personal income rate that applies whenever the amount of taxes paid falls below some designated level
