Taxes and Government Spending Flashcards
Tax
A required payment to a local, state, or national government
Revenue
Income received by a government from taxes and other nontax sources
Progressive Tax
Tax for which the percentage of income paid in taxes increases as income increases
Proportional Tax
Tax for which the percentage of income paid in taxes remains the same at all income levels
Regressive Tax
Tax for which the percentage of income paid in taxes decreases as income increases
Individual Income Tax
Tax based on a person’s earnings
Corporate Income Tax
Tax based on a company’s earning
Property Tax
Tax based on real estate and other property
Sales Tax
Tax based on goods or services that are sold
Incidence of a Tax
The final burden of a tax
Withholding
Taking tax payments out of an employee’s pay before he or she receives it
Tax Return
Form used to file income tax
Taxable Income
Earnings in which tax must be paid; total income minus exemptions deductions
Personal Exemptions
A set amount that taxpayers may subtract from their gross income for themselves, their spouse, and any dependents
Tax Deduction
A variable amount that taxpayers may subtract from their gross income
Tax Credit
A variable amount that taxpayers may subtract from the total amount of their income tax
Estate Tax
A tax on the total value of the money and property of a person who has died
Gift Tax
A tax on the money or property that one living person gives to another
Tariff
A tax on imported goods
Tax Incentive
The use of taxation to discourage or encourage certain types of behavior
Mandatory Spending
Spending that Congress is required by existing law to do
Discretionary Spending
Spending about which Congress is free to make choices
Entitlement
Social welfare program that people are “entitled to” benefit from if they meet certain eligibility requirements’
Budget
An estimate of future revenue and expenses
Operating Budget
Budget for day-to-day spending needs
Capital Budget
Budget for spending on major investments
Balanced Budget
Budget in which revenue and spending are equal
Tax Exempt
Not subject to taxes
Tax Assessor
Official who determines the value of property
Deductions
Variable amounts that you can subtract or deduct from your gross income
FICA (Federal Insurance Contributions Act)
Taxes that fund Social Security and Medicare
Social Security
Old-age, survivors and disability insurance established in 1935 to ease the hardships of the Great Depression
Medicare
National health insurance program that helps pay for health care for people over age 65 or with certain disabilities
Medicaid
Entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes
