Chapter 11 Section 6 pg. 214 - 217 Flashcards
Approximately how much of all tax money paid by American people is paid to the state and local government?
> approximately 1/4 of all tax money paid by the American people is paid to state and local government
Describe the 14th amendment in terms of limiting taxing powers
> Supreme Court has interpreted 14th amendment to prohibit states from what is considered unreasonable taxation
Describe sales tax
> single most important source of revenue among states today
accounts for approximately half of all tax money collected by states
types of sales tax: general sales tax and selective sales tax
considered regressive tax because it tends to place greatest burden on those with lower incomes
Define sales tax
> sales tax - tax levied on retail sale of commodity purchased by consumer
Describe general sales tax
> 45 states levy general sales tax
applies to sale of most products
rate varies from 3% - 7%
collected by retailers and turned over to state government at regular intervals
Describe selective sales tax
> put on items such as gasoline, tobacco products, alcoholic beverages, and certain other commodities
collected by retailers and turned over to state government at regular intervals
some cities and counties also levy sales tax, usually added to state sales tax
Describe income tax
> another important source of revenue for many states
types of income tax: individual income tax and corporate income tax
rates vary among states
in most states which levy individual income tax
considered progressive because persons with greater incomes pay at higher rate
more a person earns, the larger the percentage of his income tax
Describe corporate income tax
> in most cases, is uniform
>each corporation pays certain fixed percentage of profits
Describe inheritance tax
> often referred to as “death taxes”
levied against person’s inherited share of estate
whereas, estate tax is levied against entire estate before it passes to beneficiaries
levied in addition federal estate tax
gift tax is when one gives large gift of money or property to another person
Describe property tax
> annual
once was chief source of state income
now mostly taken over by counties, townships, and cities
is chief source of income for local government
provides average of 75% of local tax collection across US
large portion used to support public education and help pay for police and fire protection and street repair
may be levied on real property or personal property
based upon value
rates often expressed in mills
tend to be regressive
Describe real property
> includes land, buildings, and improvements on the land
taxes on real property sometimes called real estate taxes
usually assessed every 2 to 4 years
Describe personal property
> includes personal possessions
may be divided into tangible personal property and intangible property
usually assessed each year
Describe tangible personal property
> movable property which is visible and value of which is reasonably easy to assess (such as tools, animals, autos, pianos, or television sets)
Describe intangible personal property
> such as bank accounts, stocks, and bonds
Describe assessment of property
> to determine its value for tax purposes is usually done by popularly elected county, township, or city assessor
assessment value of property is usually lower than market value of property
assessment value of property generally ranges between 40%-60% of market value
