Public Finances Flashcards
How is income tax calculated
As a % of incomes that people earn
What type of direct tax do business have to pay to the government
Corporation tax
What is a direct tax
A tax paid directly to the govt
What are th e3 types of tax system
Progressive , regressive , proportional
What is progressive income tax
Proportion of tax paid progresses as you earn more
What is regressive tax
The proportion of income paid in tax decreases as income increases
What is a proportional income tax system
Proportion of tax you pay stays the same as income increases
Define indirect tax
Tax paid by a producer when goods and services are purchased
What is specific tax
A fixed amount of tax paid on each unit sold
Firms pay this tax to the government
What is an ad valorem tax
A tax charged as a percentage of the price of the good
When does a budget surplus occur
When tax revenue is greater than govt spending
What is the term used to describe an economy where tax revenue is equal to govt spending
A balanced budget
What is meant by a government bind
A method of government borrowing
