Economics Chapter 16

progressive income tax

rate increases as income level rises (usually capped off at some rate)

what 3 federal taxes account for 91% of federal government tax revenue

1. personal income tax (47%) 2. corporate income tax (10%) 3. Social Security tax (34%)

is sales tax regressive, proportional or progressive?

A sales tax is a type of proportional tax since all consumers, regardless of earnings, are required to pay the same fixed rate

What is the difference between debt and deficit?

Debt can be thought of as all of the deficits added up Deficit is the difference between the money Government takes in and what the Government spends. When there is a deficit, Treasury must borrow the money needed for the government to pay its bills.

Proportional income tax

everyone pays at the same rate, whatever the income level

budget deficit

federal government expenditures are greater than federal government tax revenues

budget surplus

federal government expenditures are less than federal government tax revenues

What type of tax is U.S. federal income tax? Do you think it is best? Why or Why not?

progressive

regressive income tax

rate decreases as income level rises

national debt

sum total of what federal government owes its creditors

How are current budget deficits linked to higher taxes in the future?

when government spends more than it collects in tax revenue, it has to borrow the difference. We will have to pay higher taxes in the future to pay the interest on the national debt