Chapter 12 Flashcards
Deficit
State spends more than it receives in taxes one year (equal to amount of spending - amount of taxes)
Federal Debt
Total amount state owes
State spends more than it taxes by…
selling gvt bonds to individuals, companies, and gvt
Federal Debt is also
total amount of gvt bonds outstanding
Net Public Debt
Portion of debt US gvt owes to others
To understand how big debts are,
debts are looked at as percentage GDP.
Congressional Budget Office (CBO)
Chief forecaster of how taxes and spending will affect the budget
Static Scoring
Assumes that individuals will not change their behavior if taxation or spending changes
Dynamic Scoring
Looks at effects of past changes on behavior to forecast effects of new legislation
New Deal normalized social costs (spreading private costs to society)
by taxation
Hauser’s Law
No matter how high rates go, tax revenues stay in 17-18% range
We cannot balance our spending problems with
tax raises
Progressive Tax
One which tax rate rises as income rises
Proportional Tax
One which tax rate is the same at all income levels
Regressive Tax
One in which tax rises as income falls
