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16 Cards in this Set
- Front
- Back
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largest sources of revenue for the national government
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1. individual income taxes
2. payroll taxes/social insurance |
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taxable income
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total income - amount based on # of dependents - deductibles
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largest categories of national government spending
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1. social security
2. national defense |
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transfer payment
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government payment not made in exchange for a good or service (i.e. social security)
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most important sources of revenue for state governments
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1. sales tax
2. property tax |
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biggest expenditure of state/local governments
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1. education
2. public welfare (incl transfer payments to the poor) |
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costs of taxes
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1. deadweight losses due to the distortion of decisions
2. administrative burdens born by taxpayers in order to comply to the laws |
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an efficient tax system...
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...imposes small deadweight losses and small administrative burdens
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because taxes distort incentives, they...
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...entail deadweight losses
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deadweight loss from taxes
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total surplus falls by more than the tax revenue
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deadweight loss
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inefficiency that a tax creates as people allocate resources according to the tax incentive rather than the true costs/benefits of the goods/services they buy/sell
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marginal tax rate
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the extra taxes paid on an additional dollar of income... divide the change in taxes paid by the change in income
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average tax rate
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total taxes paid divided by total income
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lump-sum tax
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tax of the same amount for every person
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vertical equity
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taxpayers with a greater ability to pay taxes should pay larger amounts
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horizontal equity
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taxpayers with similar abilities to pay taxes should pay the same amount
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