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35 Cards in this Set

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  • Back
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What is Tax?
A required payment to a local, state or national government.
How a government collects money needed to operate.
What is Revenue?
The income received by a government from taxes and nontax sources
Needed by government to provide goods & services for its citizens (i.e., highways, national defense, educaton, & law enforcement)
What is a Tax Base?
Income, property, good, or service that is subject to tax.
Includes a person's earnings as individual income tax.
What is Individual Income Tax?
A tax on a person's earnings
the more one earns the more tax he/she pays
What is Sales Tax?
A tax on the dollar value of a good/service being sold
sales tax is set as a % of the dollar by county (local) government (i.e., Stephens County is 7% on the dollar)
What is Property Tax?
A tax on the value of a property.
Includes "Real Estate", land or building and personal property (jewelry, furniture & boats) and sometimes intangible property as bank accounts, stocks & bonds.
What is a Tax Assessor?
An official who determines the value of a property
Uses fixed dollar amount per $1,000 of the assessed value to figure property tax
What is Corporate Income Tax?
A tax on the value of a company's profits
Less than 10% of federal revenues in recent yrs.; difficult to assess due to their business deductions
What is Proportional Tax?
A tax for which the percentage of income paid in taxes remains the same for all income levels.
Percentage of tax remains the same whether income goes up or down.
What is a Progressive Tax?
A tax for which the percentage of income paid in taxes increases as income increases.
% income paid in taxes rises with amount of income earned
What is a Regressive Tax?
A tax for which the percentage of income paid in taxes decreases as income increases.
Ex. Although, sales tax rate remains constant, a sales tax decreases due to higher-income households spending a lower proportion of their incomes on taxable goods & services. Proportionately lower income families pay more taxation based on their earnings.
What is Incidence of a Tax?
The final burden of a tax.
ex. Producers can "pass on" the burden of taxation to its consumers if its goods are more inelastic (will be bought regardless of price)
What is Withholding?
Taking tax payments out of an employee's pay before he/she receives it.
Based on an estimate of how much you will owe in federal income taxes for the entire year.
What is a Tax Return?
A form used to file income taxes.
form used to declare your income to the government and figure out your taxable income
What is Taxable Income?
Income on which tax must be paid; total income minus exemptions and deductions.
a person's gross / total income - exemptions & deductions. G.I. includes salaries, wages, tips, & concessions; also income from savings accounts & dividends from stocks
What is a Personal Exemption?
A set amount that you subtract from your gross income for yourself, your spouse, and any dependents.
This amount subtracted from G.I. includes various deductions.
What are Deductions?
Variable amounts that you can subtract or deduct from your gross income (G.I.)
Includes interest on mortgage, donations from charity, some medical expenses and state or local tax payments.
What is FICA?
Taxes that fund Social Security and Medicare.
Federal Insurance Contributions Act taxation funds SS & Medicare programs
What is Social Security?
Old-Age, Survivors, and Disability Insurance (OASD)
Federal Gov. established in 1935 to ease hardships of Great Depression. Payments shared by employees & employers
What is Medicare?
A national health insurance program that helps pay for health care for people over age 65 or with certain disbilities.
Both employees & employers pay Medicare tax on all their earnings with no ceiling.
What is Estate Tax?
A tax on the estate, or total value of the money and property, of a person who has died.
Tax paid out of estate before the heirs get their share; in 2004 if total vlue of estate is $1.5 million or less, there is no federal estate tax.
What is a Gift Tax?
A tax on money or property that one living person gives to another.(ex. a person can give up to $10,000 a yr. tax free to each of several different people).
Goal of this tax est. in 1924, was to keep people from avoiding estate taxes by giving away their money before they died.
What are Tariffs?
A tax on imported goods. Intended to encourage purchase of domestic goods.
taxes intended to protect American farmers and industries from foreign competitors rather than raise revenue.
What are Tax Incentives?
The use of taxation to encourage or discourage certain behavior.
Ex."vice/sin" taxes on tobacco and alcohol products.
Also deductions on fuel efficient cars, & home improvements for energy conservation.
What is Mandatory Spending?
Spending on certain programs that is mandated or required by existing law.
Ex. Social Security & Medicare programs
What is Discretionary Spending?
Spending about which government planners can make choices.
This type spending has decreased in comparison to Mandatory spending.
What is Entitlement?
Social welfare program that people are "entitled to" if they meet certain eligibility requirements.
Ex. certain citizens are "entitled to" social welfare programs based on age & income level
What is Medicaid?
Entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes.
largest source of benefits for low-income families; funded by taxes withheld from people's paychecks; serves 40M people >65yrs.
What is an Operating Budget?
Budget for day-to-day expenses.
Include state employee salaries, supplies like computers/paper & maintainance of state facilities from state capital to roadside parks
What is a Capital Budget?
Budget for major capital or investment;expenditures.
funds new buildings or construction projects by long-term borrowing or the sale of bonds.
What is a Balanced Budget?
Budget in which revenues are equal in spending.
Laws require a ___ ___ in 49 states regarding the Operating(states) not Capital Budget.
What is Tax Exempt?
Not subject to taxes.
Ex. non-profit organizations, religious groups, and charities
What is Real Property?
Physical property such as land or buildings.
"Real Estate" taxes are levied by local governments
What is Personal Property?
Possessions such as jewelry, furniture or boats.
taxes are levied by local governments on personal property
What is a Tax Assessor?
An elected official who determines the value of a property.
This official figures property tax based on a fixed dollar amount per $1,000 of the assessed value. Main source of funding for schools.