Econ Ch.19 Taxes
Flat tax
A single-rate tax system, replaces the current system of multiple tax brackets, eliminates all deductions, tax credits and most exemptions (loopholes)
regressive
A tax is ___________ if its average rate declines as income increases
Flat
A tax is ___________ if its average rate remains the same regardless of the size of income
less
Flattening out the marginal tax rates would make the system _____ progressive
In-kind income
Goods and services received directly (not via market transaction)
reduce
Higher marginal tax rates tend to ________ incentives
progressive
If the tax rate on added income rises as income rises, the system is?
Sales and property taxes
Major source of revenue for state and local government, regressive tax rates
Horizontal equity
People with equal incomes should pay equal taxes
Vertical equity
People with higher income should pay more taxes than people with lower incomes
Marginal
Progressive taxation is achieved by applying higher ________ tax rates
increase
Progressive/ marginal tax rates __________ as income increases
higher
Property tax is reflected in_________ rents
Efficiency
Rewards producers based on their value in production
more
Steeply rising marginal tax rates would make the system ________ progressive
Effective
Tax rates that are taxes paid divided by total income
Effective tax rate
Taxes paid divided by total income
Progressive
Taxes that imposes higher tax rates on high incomes than on low incomes
Tax elasticity of supply
The % change in quantity supplied divided by the % change in tax rate equals?
Personal income
The amount earned and received by houeseholds before taxes are paid
Progressive
The federal income tax is ____________
greater equity
The government strives for ______________
Efficiency
The market strives for ___________
Regressive taxes
The tax rate falls as income rises, imposes a proportionally larger burden of the tax on lower-income earners
Proportional
The tax system as a whole is nearly ______________
Marginal tax rate
Type of progressive tax rate that is imposed on the last dollar of income, increases as income rises
less
Wealth tends to be distributed _________ equally than income
Vertical and horizontal
What are the 2 equity considerations for the federal income tax?
Sales and property taxes, payroll taxes
What are the 3 types of regressive taxes?
Reduce inequality
What is the goal of progressive tax rates?
Progressive
What tax system is US?
Tax incidence
Where the real burden of a tax falls
Sales
________ tax is the primary source of revenue for state governments
equity
a more equal distribution
Nominal
tax rates that are taxes paid divided by taxable income
Nominal tax
taxes paid by taxable income
Progressive tax system
taxes the "rich" heavily and distributes the proceeds to the "poor".
Quintile
20 % of the total number
Payroll taxes
2nd largest source of federal revenue, workers pay this tax on earnings up to 117,000, regressive tax, higher income earners pay no tax on income above that level, half of the tax is paid by employers
Higher
At _________ incomes, earners do not pay sales tax on income not spent, but saved
Lower
At __________ incomes, earners spend all of their income, which is subject to sales tax
Quintiles
fifths or 20% of households, divide households by this or according to their income
low
for property taxes, income going to housing is higher for _____-income earners, who primarily rent rather than own