Macroeconomics Tax Systems
The idea that taxes should be levied on a person according to how well that person can shoulder the burden
Ability-to Pay Principle
The idea that people should pay taxes based on the benefits they receive from the government
Benefits-received Principle
Tax laws affect
Both efficiency and equity
An excess of government spending over government receipts
Budget Deficit
Taxes paid by companies on their profit
Corporate Income Tax
Two objectives of policy makers in designing a tax system
Efficiency and Equity
Taxes paid on specific goods like gasoline, cigarettes, alcoholic beverages, etc..
Excise Tax
The deliberate change in government spending programs or taxes to stimulate or slow down the economy
Fiscal Policy
An excess of government receipts over government spending
Government Surplus
The idea that taxpayers with similar abilities to pay taxes should pay the same amount
Horizontal Equity
the idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the ...
Horizontal equity principle
What are the two types of taxes that working individuals pay on their earnings?
Individual income tax and social insurance taxes
Public schools get most of their operating funds from..
Local property tax
A tax that is the same amount for every person regardless of earnings or any actions that the person might take, also considered efficient taxes because they do not influence a person's decision on how much to work.
Lump-sum tax
Tax law that treats a married couple as a "single" tax payer
Mariage and Tax Liability
Taxes paid by an individual on their income
Personal Income Tax
If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is
Progressive
A tax for which high-income taxpayers pay a larger fraction of their income than do low-income taxpayers
Progressive Tax
A tax for which high-income and low-income taxpayers pay the same fraction of income
Proportional Tax
A tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers
Regressive Tax
The Federal Insurance Contributions Act
Social Security Insurance Tax
Total taxes paid divided by total income x 100
The Average Tax Rate
The % paid in taxes on an additional dollar of income x 100
The Marginal Tax Rate
Gasoline taxes that are typically used for highway construction and maintenance are consistent with which principle of taxation?
The benefits-recieved principle
The idea that taxpayers with a greater ability to pay taxes should pay larger amounts
Vertical Equity
A personal exemption refers to ...
an amount representing basic living expenses that can be subtracted from income
The "ability-to-pay" principle of taxation is the normative idea that ...
an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals
An efficient tax system is one that..
imposes small deadweight losses and small administrative burdens
Exemptions and deductions are used by ....
taxpayers to reduce the amount of income subject to tax