Taxes Flashcards
Mandatory payment to a local, state, or national govt
Tax
Govt income from taxes and nontax sources
Revenue
The rights of the govt to tax are set down in the ________________
US/State constitution
People should be taxed on their ability to pay, no matter the level of benefits they receive
Ability-to-pay Principle
People who benefit from public goods should pay for them in proportion to the amount of benefits received
Benefits-received Principle
Tax systems must meet what three criteria?
Efficiency, Equity, and Simplicity
The final burden of a tax
Incidence
The use of taxes to encourage or discourage certain economic behaviors
Tax incentive
Taxes imposed on products or activities considered to be unhealthful or damaging to society
Sin taxes
The second highest source of federal revenue
Social insurance taxes
The largest amount of taxes for the federal govt
Individual income tax
Money taken from a worker’s pay before the worker receives it
Withholding
The govt agency that collects the money for the federal govt and administers the federal tax system
IRS
Takes the same percentage of income from all taxpayers
Proportional tax
Places a higher percentage rate of taxation on high income people
Progressive tax
Progressive tax based on the ability-to-pay principle of taxation
Federal income tax
Taxes are supposed to be filed by _______________ each year
April 15th
Federal Insurance Contributions act, a payroll tax that provides coverage for the elderly, the unemployed due to disability, and surviving family members of wage earners who died
FICA
Federal program to aid older citizens who have retired, children who have lost a parent or both parents, and people with disabilities
Social security
The employer and employee each pay _______ of the employee’s income up to an annual maximum for social security
6.2%
Takes a larger percentage of income from low income people
Regressive tax
What are the two types of deductions someone can file on their taxes?
Standard and itemized
What amendment allowed for the taxing of individuals?
16th
National health insurance program for citizens over 65 and certain other groups of people
Medicare
Employers and employees pay ______________ of employee income for medicare policies
1.45%
Program funded by federal and state taxes and administered by the states to assist people who are unable to work
Unemployment compensation
Unemployment tax applies to the first _________ an employee earns
$7000
Third largest source of tax revenue for federal government
Corporate income tax
Tax on property that is transferred to others on the death of the owner
Estate tax
Tax on money or property given by one living person to another
Gift tax
In alabama, a gift cannot exceed _____________ per year, per individual
$14000
Tax on the production or sale of a specific product
Excise tax
Tax on goods imported into the United States from another country
Customs duties
Another name for the custom duty
Tariff
Money charge for the use of a good or service
User fee
What are the two categories of govt spending?
Mandatory and Discretionary
Govt spending required by law
Mandatory spending
Govt spending that is approved each year by congress
Discretionary spending
The plan for spending federal tax money
Federal budget
A 12 month period for which an organization plans it expenditures
Fiscal year
The president’s budget is prepared by the ____________________
Office of Management and budget
Money distributed to individuals who do not provide anything in return
Transfer payments
Transfer payment from the federal government to state-or local governments
Grant-in aid
The part of the economy that is owned by individuals or businesses
Private sector
