Term
| name the 3 sources of funding available to goverment |
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Definition
1. explicit fees (charges)
2. taxes
3. borrowing |
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Term
| goverment budget constraint |
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Definition
limit of gov spending.
-government cannot exceed the sum of user charges, tax revenues and borrowed funds |
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Term
| cant the gov borrow unlimited funds? |
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Definition
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Term
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Definition
| value of goods, services, wealth or incomes subject to taxation |
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Term
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Definition
| proportion of a tax base that must be paid to a gov as taxes |
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Term
| what consists of the "dual bracket" tax system? |
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Definition
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Term
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Definition
| change in taxes due divided by change in taxable income |
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Term
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Definition
| specific interval of income which marginal tax rate is applied |
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Term
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Definition
| total tax payment divided by total income |
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Term
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Definition
| no matter the person's income, taxes are the same proportion |
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Term
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Definition
| system where as income increases, a higher percentage of more income is paid as taxes |
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Term
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Definition
a tax system where the more dollars earned, the percentage of tax paid on them falls.
ex: US social security |
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Term
| name the 3 types of tax systems! |
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Definition
1. proportional
2. progressive
3. regressive |
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Term
| what is the most important tax in the us economy? |
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Definition
| the federal personal income tax, which accounts for 46% of all revenue |
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Term
| what was the Tax Reform Act of 1986? |
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Definition
| a reduction of 14 tax brackets down to 3 |
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Term
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Definition
positive gain between purchase and price
ex: buying a car for $5 and selling it for $15 ($10 capital gain) |
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Term
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Definition
negative difference between purchase and price
ex: buying for $5 and selling for $2 |
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Term
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Definition
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Term
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Definition
| money that a corporation saves for investments. this money is not distributed to stockholders |
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Term
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Definition
| when a corporation has to pay twice on taxes. 1 time for the after tax profit and 1 time for the income |
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Term
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Definition
| distribution of tax burdens among various groups in society |
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Term
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Definition
taxes on prices paid on most goods and services.
-sales tax is a proportional tax |
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Term
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Definition
| tax is applied "to the value" of the good |
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Term
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Definition
assumes that changes in the tax rate have no effect on the tax base.
-if the government wants to raise taxes, it can and it will not harm them |
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Term
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Definition
| belief that an increase in tax rate is a decrease in tax base |
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Term
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Definition
tax levied on a particular good or service
ex: set taxes on gas |
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Term
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Definition
| constant tax assessed on each unit of a good that people buys |
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Term
| social security contributions |
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Definition
| the mandatory taxes paid out of workers pay |
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Term
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Definition
| annual benefit that results from making an investment |
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Term
| inflation-adjusted return |
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Definition
| rate of return that is measured in terms of real goods and services |
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Term
| what will it take to salvage social security? |
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Definition
1. raise taxes
2. reduce retirement benefit payout
3. reduce disability benefits
4. reform immigration policies
5. find a way to increase social security's implicit rate of return |
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Term
| average tax rate vs. marginal tax rates |
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Definition
average tax rate is the ratio of total tax payments to total income. marginal tax rate is the change in taxes by change in total income.
-marginal taxes shift with income person by person |
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Term
| U.S is what kind of tax system? |
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Definition
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Term
| static tax analysis vs. dynamic tax analysis |
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Definition
static: belief that government will gain more if they raise taxes
dynamic: belief that government will lose money is they raise taxes |
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Term
| where do social security benefits come from? |
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Definition
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