unit 6 Flashcards
(32 cards)
Types of taxes at the federal government level
Income tax, corporate income tax, SS, medical unemployment tax, excise, estate, gift, import
Types of taxes at the state level
Sales tax, state income tax, corporate income tax
Types of taxes at the local level
Property tax, sales, excise, income
Where does each level get the most money? (yield)
Federal revenue-individual income tax
State revenue- sales and excise tax
local revenue- property tax
Progressive Tax
Tax for which the % of income paid in taxes INCREASES and income INCREASES -EX: Federal income tax
Regressive Tax
Tax for which the % of income paid in taxes DECREASES as income INCREASES -EX: Sales tax
Proportional Tax
% of income tax paid remains the same for all income levels EX: Income tax
Surplus
Quantity supplied greater than quantity demanded
Deficit
Amount of $ government borrows in one fiscal year
National Debt
Total amount of money the federal government owes to bondholders
Deficit spending and its effect on economy
Federal government spends more than it makes and has to borrow to cover deficit. Investors loan $ to government by buying bonds. Banks have less $ to lend to private business—> pay higher interest rate
Tax base
Income, property, good or service subject to a tax
Tax rate
% of income taken by gov.
Benefit recieved
A person should pay taxes based on level of benefits he or she expects to receive
Ability-to-pay
People who earn more income pay more taxes
Entitlement programs at the Federal level
SS, medicare, medicaid, food stamps
Entitlement programs at the State level
Unemployment benefits
FICA
FICA-taxes fund SS and medicare—> SS-funds old age, survivors, disability insurance; –> MEDICARE- funds national health insurance for people over 65
Who pays FICA taxes?
Employees
How does SS work?
Employees withhold SS tax from paycheck and pay out when employees retire
Medicare vs. Medicaid
Care-people over 65
Aid-low-income families
Where does the federal government spend most of its money?
SS
Deficit spending and why it has increased?
Spending exceeds revenues because of national emergency -entitlement spending politically difficult to change
Self employed and businesses getting taxed by the federal gov
They pay quarterly estimated tax payments
