Taxation as a Social Policy Flashcards
What allowed congress the power “to lay and collect taxes on incomes, from whatever source derived?”
The 16th Amendment.
When was the 16th amendment ratified?
1916.
Are Americans overtaxed as compared to other countries?
No.
What are excise taxes?
Taxes on specific products.
What is a tax expenditure?
Special provisions of the tax code such as exclusions, deductions, deferrals, credits, and tax rates that benefit specific activities or groups of taxpayers.
What is an example of a tax expenditure affecting home ownership which affects tax efficiency?
Allow people to deduct from income taxes the costs of mortgage interest and property taxes on their homes, increasing the demand for home-ownership over rental units.
What is the benefit principle?
People should pay taxes in proportion to the benefits they receive.
What does the ability-to-pay principle claim?
It claims that fairness requires that taxes be allocated according to the incomes and/or wealth of taxpayers, regardless of how much or how little they benefit.
What does horizontal equity refer to?
The idea that individuals who have nearly equal incomes should have nearly equal tax burdens.
What does vertical equity refer to?
The idea that those with higher ability to pay should pay more taxes than those with less ability to pay.
What is Tax Incidence?
The actual distribution of the tax burden on different levels of income.
What is a progressive tax?
When the tax rate rises as income rises.
What is a proportional tax?
When the tax is the same through all income levels.
What is a proportional tax also referred to as?
A flat tax.
What is a regressive tax?
The average rate declines as income rises.
