Economics Chapter 9 Test Study Guide – Flashcards
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The 1991 luxury tax taxed expensive goods. The resulting higher priced drove customers away, and unemployment soared in some of these industries because the demand for luxury goods was ________.
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elastic
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tax on people's earnings
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individual income tax
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the principle of taxation that those who benefit from government goods and services should pay in proportion to the amount of benefits received
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benefit principle
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The individual income tax is based on the ________ principle of taxation
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ability-to-pay
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A tax in which individuals in higher tax brackets are taxed higher income percentages than those in lower tax brackets is a ________ tax.
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progressive
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___________ are taxed separately from individuals because they are recognized as separate legal entities.
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corporations
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a tax that the government levies on the transfer of property when a person dies. These can range from 18 to 50 percent of the estate's value.
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estate tax
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A large portion of money needed to run the government comes from _______.
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taxes
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the final burden of tax (i.e. the person who ends up paying it)
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incidence of tax
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the three major criteria that taxes must meet to be effective
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equal, simple, efficient
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The _________ amendment of the Constitution allowed Congress to levy the income tax.
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sixteenth
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a tax taken out of one's paycheck automatically
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payroll tax
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a tax on donations of money or wealth
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gift tax
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a tax that imposes a higher percentage of taxation on lower incomes than higher
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regressive tax
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the branch of the U.S. Treasure Department in charge of collecting taxes
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Internal Revenue Service
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an annual report to the IRS summarizing total income, deductions, and the taxes withheld by employers
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tax return
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an upward revision of the tax brackets to keep workers from paying more in taxes just because of inflation
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indexing
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a tax on the manufacture or sale of selected items, such as gasoline and liquor
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excise tax
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a charge levied on goods brought in from other countries
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customs duty
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charges levied for the use of a good or service
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user fees
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the decision made on what a state will use as its main revenue
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choice of tax
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the fastest-growing form of state revenue
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lotteries
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funds collected by one level of government that are distributed to another level of government for expenditures
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intergovernmental revenue
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a tax on tangible and intangible possessions such as real estate, buildings, furniture, automobiles, farm animals, stocks, bonds, and bank accounts
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property tax
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the person who assigns value to property for tax purposes
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tax assessor
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the U.S. President during the 1981 tax reform
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Ronald Reagan
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larger than normal depreciation charges
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accelerated depreciation
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a reduction in business taxes that are tied to investment in new plants and equipment
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investment tax credit
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an additional tax above and beyond the base rate
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surcharge
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the personal income rate that applies whenever the amount of taxes paid falls below some designated level
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alternative minimum tax
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the number of tax brackets left after the 1986 reform
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2
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the income tax was capped at ___, rather than 70%, after the 1981 reform
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50%
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the surcharge percentage after the 1986 reform
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5%
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the U.S. President during the 1997 reform
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Bill Clinton
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profits from the sale of an asset held for twelve months
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capital gains
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Surpluses added in the 2001 reform were projected to last until ____.
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2010
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a tax placed on the value that manufacturers add at each stage of production, which the U.S. does not currently have
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value-added tax
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a proportional tax on income after a specified threshold
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flat tax
