Govt Tax And Spending Flashcards
Benefits received principle
Those who benefit from five services should pay tax.
Pay in proportion to amount of benefits you receive
Ex: road tolls sales tax gas tax
Ability to pay principle
People are taxed based on their ability to pay no matter what benefits they receive.
People with higher income pay more
Ex: federal income tax- the more you make the high % in tax you pay
Major sources of tax revenue
Individual income tax.
Property tax.
Sales tax.
Individual income tax
Based on income from all sources this includes tips wages interest dividends. Income tax is mostly collected by federal and state govt
Property tax
Based on value of assets
Usually real estate
Collected by local govt
School tax is collected from property owners by local school districts
Two principles of taxation
Benefits received principle
Ability to pay principle
Withholding
Payroll taxes that are deducted from paychecks
What is the irs in charge of
Collecting federal income taxes
Fg individual income tax
Accounts for almost half of all federal tax revenue automatically collected from pay check
FICA
Social security taxes automatically collected from paycheck
Social security
Benefits retired people over 65, 65 and disabilities and minors who lost a prank
Medicare
Health insurance program for people over 65
Corporate income tax
No every corporate has this
35 is the rate of tax but barely any pay this amount
Proportional tax
Taxes the same % of income for all taxpayers
Taxes stay the same when income level changes
Progress tax
High tax rates for high income
As income increases % paid in taxes also increases
