Ch. 17: Public Choice, Taxes, & Income Distribution Flashcards
1
Q
What is the Voting Paradox?
A
the failure of majority voting to always result in consistent outcomes
2
Q
What is the Median Voter Theorem?
A
outcome of a majority vote is likely to represent the preferences of the voter in the political middle
3
Q
Causes of Government Failure
A
- Rent Seeking
- Log Rolling & Rational Ignorance
- Regulatory Capture
4
Q
What is rent seeking?
A
use of gov’t action to make one better off at the expense of others; self-interest
5
Q
What is rational ignorance?
A
no worry about insignificant things
6
Q
Types of Taxes
A
- Individual Income Taxes
- Social insurance Taxes
- Sales Tax
- Property Tax
- Excise Tax
7
Q
What is an Excise Tax?
A
taxes on specific goods (gasoline, cigs, beer)
8
Q
What is Social Insurance Tax?
A
taxes on wages and salaries to raise revenue for Social Security & Medicare; aka payroll taxes
9
Q
A
