Econ Unit 6 Fiscal Policy: Government Taxation and Spending

Appropriations bill

A bill that reserves federal money for a specific purpose; originates in the House of Representatives

progressive tax

A progressive tax takes a larger percentage of income from high-income groups than from low-income groups and is based on the concept of ability to pay. A progressive tax system might, for example, tax low-income taxpayers at 10 percent, middle-income taxpayers at 15 percent and high-income taxpayers at 30 percent. (i.e. federal income tax)

proportional tax

A tax in which the average tax rate is the same at all income levels.

excise tax

A tax on the manufacture, sale, or consumption of goods produced within a country (i.e. a sales tax or inventory tax)

Who qualifies for Medicare coverage?

Any person 65 years or older, with few exceptions, who has medical expenses regardless of their personal income or net worth

What are the three major federal taxes?

FICA (Federal Insurance Contributions Act), Corporate income tax, and the Individual income tax are the three major federal taxes (income tax is not the same as FICA taxes, although both come from a person's earned income)

What is are FICA taxes?

FICA taxes are those arising from the 1937 law—the Federal Insurance Contribution Act (FICA). These taxes include contributions to both the federal Social Security and Medicare programs, and must be paid by all American workers, whether they are employed by a company or are self-employed.

Public goods

Goods, provided or secured by a level of government, available to society which no private person or organization can own.

Entitlements

Programs such as unemployment insurance, disaster relief, disability payments, or Social Security that provide benefits to all eligible citizens.

How are property tax rates determined?

Property taxes are calculated by taking the mill levy (millage rate)and multiplying it by the assessed value of your property. The assessed value is a yearly estimation performed to decide the reasonable market value for your home based upon prevailing local market prices. (Property tax= millage rate x rate of assessed value)

What is the largest expense for state governments?

Providing public welfare to citizens of each state is the largest state level governmental expense

Does a self-employed person file taxes?

Self employed persons are responsible for paying their own FICA taxes directly to the IRS on a quarterly basis

What are the top three federal government expenditures?

Social Security, national defense, and income security (welfare and disability) are the largest expenses for the federal government

What type of tax is the federal income tax?

The U.S. federal income tax is based on the progressive tax system.

Does the national debt impact the federal budget?

The national debt is impacted by the national budget that Congress passes each year, but the national debt does not directly impact the Congressional fiscal budget.

Who determines the mill rate?

The tax commissioners office and the board of education (county school district) determines the millage rate in Forsyth County.

Trust fund

a special account, when used by the government, set aside for certain expenditures (i.e. Social Security)

regressive tax

a tax for which the percentage of income paid in taxes decreases as income increases (i.e. sales taxes)

customs duty

a tax placed on goods coming into the country (i.e. a tariff- tax on imports)

What percentage of GDP do all levels of government consume?

about one-third (1/3) of the nation's output or GDP

government transfer payments

cash or benefits (from the government) not in exchange for goods or services but to provide for a need

Where do federal budgets originate?

federal budgets originate in the Executive Branch of government

Intergovernmental revenue

funds one level of government receives from another level of government (i.e. a Georgia state grant to the Forsyth County Schools, or a federal grant to a state department of education)

What is the largest source for revenue in general for state governments?

intergovernmental transfers are the largest revenue source for nearly all state governments

What is the largest source of tax revenue for state governments?

sales taxes are the largest tax revenue source for nearly all state governments

IRS

the bureau of the Treasury Department responsible for tax collections; the Internal Revenue Service (IRS)

What is the largest source of federal government tax revenue?

the largest source of tax revenue by the federal government is the federal income tax

What is the largest source of local government tax revenue?

the largest source of tax revenue for local governments are property taxes

Private sector

the part of the economy that involves the transactions of individuals and businesses

What made the federal income tax possible?

the passage of the 16th Amendment ratified in 1913 gave Congress permission to tax personal incomes