Poverty Line, Social Studies, Quizlet

Living Wage:

A wage sufficient to provide minimally satisfactory living conditions

Tax Withholding:

An amount gross income that is directly sent to the federal, state, or local tax authority as partial payment of tax liability for the year. Each person may or may not get this money back when taxes are filed

Budget:

Estimate of income and expenses over a specified period for specific individual used to properly plan for current and future financial items

Variable Expenses:

Expenses that change depending on the consumption of a good or service. Cost can change significantly from period to period (examples: household maintenance ,clothing, groceries, car maintenance and fuel, and utilities such as electricity, gas, water, etc.).

Fixed Expenses:

Expenses that do not change depending on the consumption of a good or service. Cost does not change from period to period. Usually paid on a regular basis, such as weekly or monthly (examples: mortgage/rent payments, car payments, phone bill, cable).

What are the current minimum wages? (Federal, IL, and Chicago)?

Federal Minimum Wage - $7.25/hr Illinois Minimum Wage - $8.25/hr Chicago Minimum Wage - $12/hr

Net Income:

Gross income minus all withheld taxes

FICA:

Includes both social security (6.2%) and Medicare (1.45%) payments. Total of 7.65%. Returned in the form of future services, not simply withheld

How is the Poverty Line determined?

Income thresholds by the official poverty measure are established by tripling the inflation-adjusted cost of a minimum food diet in 1963 and adjusting for family size, composition and the age of the householder.

Income:

Money earned through employment and investments

Total Expenses:

Money paid to a person or group to pay for an item or service

What is the formula for the poverty line?

Poverty line income = Cost of the economy food plan * 3

Gross income:

Pre-tax income

What are the two major criticisms of the Poverty Line?

The entire thing is based on the temporary or emergency food plan, and the cost of living is different now, versus the 1960's

What does our government use the Poverty Line for?

The poverty line is used to determine the level of income necessary for a family to subsist. The measure is used to create income thresholds that determine how many people are in poverty.

Minimum Wage:

The smallest hourly wage that an employee may be paid as mandated by law

How did Margaret Orshansky come up with the Poverty Line?

When Margaret developed her poverty thresholds, she based her thresholds on the "economy food plan," which was the cheapest of four food plans developed by USDA.

Deficit:

When expenses are greater than income (Net Income-Total expenses < 0)

Surplus:

When income is greater than expenses (Net income-Total expenses > 0)

Balanced Budget

When net income equals total expenses (Net income=Total expenses/0)

Federal Taxes:

With-holding start at about 10%

States taxes:

With-holdings start at about 3.75%