Economics Chapter 19 Taxes
Wealth
Accumulated assets over time
Vertical tax
Amount of income or property DIRECTLY subject to nominal tax rates
Federal personal _____________ tax is a progressive tax.
Income
Exemptions and deductions from gross income can create _____________ in income.
Inequities
If a society wants to achieve more equality by redistributing income, society must determine how much __________ of _____________ it is willing to accept.
Loss of, production
In kind income
Many goods and services distributed directly as _________ ________ For example, public housing, reduced lunch, food stamps
major component of the Obama tax hike was to increase ____________ tax rates
Marginal
the ____________ system tends to be permissive of a high degree of income inequality.
Market
Gini Coefficient
Mathmatical summary of inequality based on the Lorenz Curve
Tax paid divided by taxable income
Nominal Tax Rate
Horizontal equity states
People with higher income should pay higher taxes.
Tax burdens are guaged in relation to _______________
Peoples income. A tax is regressive is it imposes a proportionally larger burden on LOWER incomes.
____________ income is considered to be "before" tax income by households
Personal
A tax is __________ if it's average rate increases as income increases
Progressive
Personal Income
Received by households before payment of personal taxes
Welfare and Social Security payments complete what process
Redistribution, by transferring income to consumers.
Higher marginal tax rates tend to____________ ___________
Reduce incentives ---- Marginal tax rates, amount paid on last dollar earned
Tax incedence
Refers to the actual burden of a tax... Who really ends up paying it.
Sales and Property taxes are _____________ tax,
Regressive, lower Income taxpayers spend more on consumption with not as much savings or accumulated wealth.
Sales tax is the primary source of revenue for:
State Governments
Formula for Nominal Tax Rate
Tax paid divided by Taxable income
Formula for Effective Tax Rate
Tax paid divided by Total Economic Income
Two tools by which the government redistributes income in society
Taxes, transfer payments
What is the idea of horizontal equity
That people with equal income should pay equal taxes.
Tax incidence refers to
The actual bearer of a tax, rather than to whom the tax is levied upon.
Essential economic problem of absolute income equality is that it breaks
The market link between effort and reward
Tax Base
amount of income or property directly subject to nominal tax rates is the
The percent change in quantity supplied divided by the percent change in tax rate equals
The tax elasticity of supply
To understand uniform sales tax one must look at what percentage of .....
percentage of income is SPENT on basic consumption
A tax is ____________ if its average rate remains the same regardless of the size of income.
proportional
The government completes the __________ process by __________ income to consumers.
redistribution, transferring
If the area between the Lorenz Curve and the diagonal line becomes ______________, then income inequality in the nation is getting worse.
bigger
a QuinTILE is __________ percent of the total number.
20
Tax paid divided by Total Economic Income
Effective Tax Rate
the essence of the income equality VS inequality debate is the belief that their is a fundamental tradeoff between _________ and ________
Equity and Efficiency
The diagonal line in a lorenz curve indicates a distribution of income where....
Everyone has the same income as everyone else
