Chapter 20 - Taxation Flashcards
deadweight loss
a loss of total surplus that occurs because the quantity of a good that is bought and sold is below the market equilibrium quantity
lump-sum tax (head tax)
a tax that charges the same amount to each taxpayer, regardless of their economic behavior or circumstances
administrative burden
the logistical cost associated with implementing a tax
incidence
a description of who bears the burden of a tax
proportional/flat tax
a tax that takes the same percentage of income from all taxpayers
progressive tax
a tax that charges low-income people a smaller percentage of their income than high-income people
regressive tax
a tax that charges low-income people a larger percentage of their income than it charges high-income people
income tax
a tax charged on the earnings of individuals and corporations
marginal tax rate
the tax rate charged on the last dollar a taxpayer earns
capital gains tax
a tax on income earned by buying investments and selling them at higher prices
payroll tax
a tax on wages paid to employees
sales tax
a tax that is charged on the value of a good or service being purchased
excise tax
a sales tax on a specific good or service
property tax
a tax on the estimated value of a home or other property
discretionary spending
public expenditures that have to be approved each year
mandatory spending
public expenditure that “entitles” people to benefits by virtue of age, income, or some other factor
budget deficit
an amount of money a government spends beyond the revenue it brings in
budget surplus
an amount of revenue a government brings in beyond what it spends
