Economics Chapter 9 Vocabulary – Flashcards
Flashcard maker : Lisa Currey
sin tax
relatively high tax designed to raise revenue and reduce consumption of a socially undesirable product sauch as liquor or tobacco.
incidence of a tax
the final burden of the tax.
tax loopholes
exceptions or oversights in a tax law that allow some people and businesses to avoid paying taxes.
individual income tax
the tax on people’s earnings.
sales tax
a general tax levied on most consumer purchases.
benefit principle of taxation
the principle that states those who benefit from government goods and services should pay in proportion to the amount of benefits they recieve.
ability-to-pay principle of taxation
the belief that people should be taxed according to their ability to pay, regardless of the benfits they recieve.
proportional tax
a tax that imposes the same percentage rate on taxation on everyone, regardless of income.
average tax rate
total taxes divided by the total income.
progressive tax
a tax that imposes a higher percentage rate of taxation on persons with ihgh incomes than on those with low incomes.
marginal tax rate
a tax rate that applies to the next dollar of taxable income.
regressive tax
a tax that imposes a higher percentage rate of taxation on low incomes that on high incomes.
payroll withholding system
a system that requires an employer to automatically deduct income taxes from an employee’s paycheck and send the deducted taz directly to the government.
Internal Revenue Service (IRS)
the branch of the U.S. Treasury Department in charge of collecting taxes.
tax return
an annual report to the IRS summarizing total income, deductions, and the taxes withheld by employers.
indexing
an upward revision of the tax brackets to keep workers from paying higher taxes just because of inflation.
FICA
The Federal Insurance Contributions Act tax levied on both employers and employees for Social Security and Medicare.
medicare
a federal health-care program available to all senior citixens, regardless of income.
payroll tax
taxes that are deducted from a paycheck.
corporate income tax.
the tax a corporation pays on its profits.
excise tax
a tax on the manufacture or sale of selected items, such as gasoline and liquor.
luxury good
an economic product for which the demand rises faster than income when income grows.
estate tax
the tax the government levies on the transfer or property when a person dies.
gift tax
a tax on donations of money or wealth and is paid by the person who makes the gift.
customs duty
a charge levied on goods brought in from other countries.
user fees
charges levied for the use of a good or service.
ingovernmental revenue
funds collected by one level if government that are distributed to another level of government for expenditures
property tax
a tax on tangible and intangible possesions such as real estate, buildings, furniture, automobiles, farm animals, stocks, bonds, and bank accounts.
tax assessor
the persob who assigns value to property for tax purposes.
payroll withholding statement
the summary statement attached to a paycheck that summarizes income, tax withholdings, and other deductions.
accelerated depreciation
larger than normal depreciation charges
investment tax credit
a reduction in business taxes tied to investment in nee olants and equipment
surcharge
additional tax above and beyond the base rate
alternative minimum tax
the personal income rate that applies whenever the amount of taxes paid falls below some designated level
capital gains
profits from the sale of an asser held for 12 months
value added tax
a tax placed on the value that manufacturers add at each stage of production
flat tax
a proportional tax on individual income after a specified threshold has been reached
