Taxes : 4/13/16 Flashcards
A ___ is a mandatory payment to a local, state, or national government.
Tax
R_______ is government income from taxes and nontax sources.
Revenue
The rights of the government to tax are set down in the ____ c_________ and in s_____ constitutions.
U.S. Constitutions, state
The b______-r_____ p______ of t_______ holds people who benefit directly from public goods should pay for them in proportion to the amount of benefits received.
Benefit-received principle of taxation
The a______-__-___ p_______ of t_______ holds that people should be taxed on their ability to pay to matter the level of benefits they receive.
Ability-to-pay principle of taxation
Tax systems attempt to meet three criteria. : E_____, s______, and e_______.
Equity, simplicity, efficiency
The e____, or f______, of a tax is established by how uniformly the tax is applied. Ex : Everyone who buys gasoline pays the same tax.
Equity, fairness
The s________ of a tax is determined by how easy it is for the taxpayer to understand and how easy it is for the government to collect.
Simplicity
The individual income tax best meets the criterion of e________.
Efficiency
Government imposes taxes on various forms of i_____ and w_____ in order to raise the r_____ to provide public goods and various other services.
Income, wealth, revenue
A t__ b___ is a form of wealth– such as income, property, goods, or services– that is subject to taxes.
Tax base
I_______ i____ t__ is based on an individual’s income from all sources.
Individual income tax
C________ i_____ t__ is based on a corporation’s profits.
Corporate income tax
S____ t__ is based on the value of goods or services at the time of sale.
Sales tax
P______ t__ is based on the value of an individual’s or business’s assets.
Property tax
Homeowners and business owners pay p______ t____ based on the v_____ of their buildings and the l___ on which the buildings stand.
Property taxes, value, land
P______ t___may also be imposed on other assets such as a_________.
Property tax, autombiles
A p_________ t__ takes the same percentage of income from all taxpayers.
Proportional tax
A p________ t__ places a higher percentage rate of taxation on high income people.
Progressive tax
A r_________ t__ takes a larger percentage of income from low income people.
Regressive tax
States with f___ t____ generally charge rates from _____ to ____ percent of income.
Flat taxes, three to five
Cities and counties with p_________ t____ charge about ___ to ____ percent of income.
Proportional taxes, one, three
In the US, the federal income tax is a p_________ t__, because the tax rate increases as income increases.
Progressive tax
Some taxes are r______ because they are applied to s___, not i____. : Ex : Although a sales-tax rate is applied equally to all items subject to the tax, the tax as a percentage of income is regressive.
Regressive, sales, income
The i_______ of a t__ is the final burden of that tax. In other words, it is the impact of the tax on a taxpayer.
Incidence of a tax
A t__ i_______ is the use of taxes to encourage or discourage certain economic behaviors.
Tax incentive
S__ t____ are often imposed on products or activities considered to be unhealthful or damaging to society, such as gambling, alcohol, or cigarettes.
Sin taxes
The largest source of taxes for the federal government is the i________ i____ t__.
Individual income tax
The government began using the income tax after the __th Amendment to the Constitution which occurred in ___.
16, 1913
S______ i______ t____ are the second highest source of federal revenue. : Workers and employers share the burden of these taxes.
Social insurance taxes
To make it easier for taxpayers and the government, a p_____ t__– a tax taken from a worker’s paycheck– is collected.
Payroll tax
The p_____ t__ is deducted from a paycheck as a withholding, or money taken from a worker’s pay before the worker receives it.
Payroll tax
The ___ is the government agency that collects the money for the federal government and administers the federal tax system.
IRS
The federal income tax is a p_______ tax based on the a_____-__-___ principle of taxation.
Progressive, ability-to-pay
Many taxpayers take a s_______ d______ or i_____ d________, such as interest paid on a home mortgage, state and local taxes, charitable contributions, and certain portion of medical expenses.
Standard deductions, itemize deductions
Each year, taxpayers must complete a t__ r___, a form used to report income and taxes owed to various levels of government.
Tax return
Taxes are to be filed by A____ __th each year.
April 15th
_____ is the F______ I________ C__________ A__, a payroll tax that provides coverage for the elderly, the unemployed due to disability, and surviving family members of wage earners who have died.
FICA, Federal Insurance Contributions Act
F____ is also known as s_____ i_______.
FICA, Social insurance
F___ encompasses S_____ S_______ and M_______.
FICA, Social Security, Medicare
S______ S________ is a federal program to aid other citizens who have retired, children who have lost a parent or both parents, and people with disabilities.
Social Security
Social Security : The employer and employee each pay ___% of the employee’s income up to an annual maximum.
6.2
Introduced in 1966, M______ is a national health insurance program for citizens over __ and certain other groups of people.
Medicare, 65
Medicare : Employers and employees each pay ____% of employee income.
1.45
U____________ c_________is a program funded by federal and state taxes and administered by the states.
Unemployment compensation
U____________ provides benefits for a certain period of time to employees who lose their jobs through no fault of their own.
Unemployment
U_____________ t__ applies to the first $_____ earned by an employee.
Unemployment tax $7000
Under normal times, an individual can collect unemployment benefits for a maximum of __ weeks. After the recession, Congress passed the emergency benefit program to extend that duration to __ weeks.
26, 72
C_________ i______ t____ is the third largest source of tax revenue for the federal government.
Corporate income taxes
T__ b_____ for corporations include : deductions for investment in buildings, equipment, research, and rule that benefit multinational corporations.
Tax breaks
P_____ are taxed at the c________ level and again at the i_______ level, since shareholders pay taxes on the income they receive in the form of dividends and capital gains.
Profits, corporate, individual
The e_____ t__ is a tax on property that is transferred to others on the death of the owner. Most estates are not subject to this tax, because the government only taxes l____ estates.
Estate tax, large
The g___ t___ is on money or property given by one living person to another.
Gift tax
In Alabama, the maximum amount of a gift you receive cannot be more than $______ per year, per individual.
$14,000
The e_____ t__ is a tax on the production or sale of a specific product, such as gasoline or telephone service.
Excise tax
The government places e_____ t____ on goods or services for which there is a relatively i______ demand in order to maintain a steady stream of revenue.
Excise taxes, inelastic
The c_______ d___ is a tax on goods imported into the United States from another country.
Customs duty
C______ d______ are basically excise taxes on imports and are also known as t____.
Customs duties, tariffs
The u____ f___ is money charged for the use of a good or service. The federal government charges entrance, parking, and camping fees to visitors to national parks.
User fee
The programs and services the federal government funds with tax revenue are divided into two categories. : 1. M________ s_______– is required by law. 2. D___________ s_______– has to be authorized each year.
Mandatory spending, discretionary spending
M_______ s_______ makes up well over half of all f_______ spending.
Mandatory spending, federal
Most of this spending is in the form of e_________, which are social welfare programs with specific requirements.
Entitlements
Many of these programs are not “m_____ t______” (meaning certain conditions have been met to receive the benefit).
Means tested
The S______ S______ program takes the largest amount of federal spending.
Social Security
Workers must have worked for a certain period of time before they are eligible to receive full benefits under the program which is __ years in the United States.
10
To help control costs, the government has gradually raised the age of f___ r_________.
Full retirement
The M_______ program was introduced in 1966 as an additional old-age benefit under Social Security.
Medicare
M_______ is a joint federal-state medical insurance program for low-income people.
Medicaid
The federal government funds about __% of the costs of the program, and the states pay about __%.
63, 37
The F___ S____ program provides funds for about __ million low-income people to purchase food.
Food Stamp, 26
V_______ b______ include health care coverage and disability payments for service-related illness or injury.
Veteran’s benefits
The largest discretionary expenditure category is n_______ d______ which takes up about __% of the total discretionary budget.
National defense, 50
H_________ s________– border protection and the enforcement of some immigration laws falls into mandatory expenditures category.
Homeland security
The f_______ b_____ is a plan for spending federal tax money.
Federal budget
The budget is prepared for a f_____ y___ a 12 month period for which an organization plans its expenditures.
Fiscal year
The federal government’s fiscal year runs from O_____ __ through S_______ __th.
October 1, September 30
The President’s budget is prepared by the O___ of M___________ and B_____.
Office of Management and Budget
A___________ are specific amounts of money set aside for specific purposes.
Appropriations
D_____ s______, by which the government buys goods and services that it needs to operate, such as military equipment and office supplies.
Direct spending
T______ p_____ are money distributed to individuals who do not provide anything in return.
Transfer payments
A g____-__-___ is a transfer payment from the federal government to state or local governments.
Grant-in-aid
The federal government influences the economy in three ways. : 1. R_______ a_______. 2. I______ r_________. 3. C_________ with the p_____ s_____.
Resource allocation, income redistribution, competition with the private sector
The p_____ s_____ is the part of the economy owned by individuals or businesses.
Private sector
