Analyze the Econ Ch 14 Essay

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