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48 Cards in this Set
- Front
- Back
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A criterion of tax fairness that people with different amounts of wealth or different amounts of income should pay different amounts. Wealth may include assets and property such as houses, cars, stocks, bonds, savings accounts, or valuables. Income includes wages, rents, interest, profits, or other payments.
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ability to pay
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Total income reduced by certain adjustments such as the IRA deduction and deduction for alimony paid.
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adjusted gross income
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A criterion of tax fairness that people should pay taxes in rough proportion to the benefits they receive from government goods and services.
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benefits received
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Taxes levied on businesses by federal, state or local govern. Include: corporate taxes ib earning and profits, unemployment insurance, workmens compensation, contributions to SS, and Medicare insurance.
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business taxes
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A direct reduction of the tax owed. Credits may be allowed for puposes such as child care and the earned income credit for low-income taxpayers.
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credits
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A person who relies on someone else for support, usually not the taxpayer, may be exempt.
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dependent
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A tax that cannot be shifted to others. The federal income tax is a good example.
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direct tax
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Ordinary dividends are a corporation's distributions to its shareholders from its earnings and profits.
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dividends
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includes wages, salaries, tip and net earnings from self-employment and other income received for personal sevices.
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earned income
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A refundable credit for low-income workers with children. This credit may be paid to the worker even if no income tax waas withheld from the worker's pay. Must fild tax return.
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earned income credit
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Taxes on the sale or use of specific products or transactions.
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excise taxes
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Free from federal income tax withholding requirements by meeting certain income, tax liability, and dependency criteria.
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exempt (rom withholding)
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Tax law provides for a set amount which taxpayers can claim for themselves, their spouses, and eligible dependents. The total of these amounts is subtracted from adjusted gross income before any tax is computed on the remaining income.
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exempt (from tax liability)
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To mail or otherwise convey to a regional IRS service center the appropriate IRS form, on which a taxpayers has entered info about income and tax liablility.
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file a return
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Based on taxpayer's marital status and other factors, the filing status determindes the tax bracket and rate at which income is taxed.
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filing status
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A form that helps an employer determine how much to withhold from an emplyee's check for federal income tax purposes.
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From W-4
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The strict constitutional steps that a proposed tax must pass through before it becomes law.
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formal tax legislation process
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Money, goods, and property you received that must be included in taxable income.
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gross income
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The concept that people in same income group should pay the same amount of taxes. "Equals should be taxed equally"
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horizontal equity
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Taxes on income, both earned and unearned. Income taxes can be levied both on individuals and businesses.
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income taxes
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A tax that can be shifted to other. The one who pays the tax to the govern may be able to shift it to others. Business property taxes are examples of indirect taxes.
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indirect taxes
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Individuals and interest groups expressing and promoting their opinions about tax legislation.
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informal tax legislation process.
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income received from savings accounts or from lending money to someone else.
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interest income
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Taxes collected from employers and employees to finance specific programs: levied on earned income such as wages, salaries, and self-employment earnings.
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payroll taxes
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A tax based on the amount of taxabe income that poeople receive anually. Taxable income is less than total incom because exemptions and tax deductions.
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Personal income tax
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A tax that takes a larger % of income from high-income groups than low-income groups.
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Progressive tax
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Taxes on property, esp. real estate, and also boats, automobiles, recreational vehicles, and business inventories.
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Property tax
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A tax that takes the same % of income from all income groups.
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Proportional tax
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A good that cannot be withheld from those who don't pay for it, and one that may be "consumed" by one person without reducing the amount of the product available for others. Examples: national defense, street lights, and roads and highways. Public service includes welfare programs, law enforcement, monitoring and regulating trade and the economy, and education.
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Public goods and services
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A govern-designated area that is declared in need of restoration and revitalization. To encourage restoration, tax reductions may be available.
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Redevelopment or enterprise zone
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A tax that take a larger & of oncome from low-income groups than high-income groups.
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regressive tax
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Taxes on retail products, based on a set % of retail cost.
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sales taxes
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A form on whis taxpayers list specific sources of income, or specific expenses for which they claim deductions or credits.
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Schedule
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An amount, fixed by law and based on filing status and age, which tawpayers may deduct from their adjusted groww income before tax is determined.
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Standard deduction
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Taxes on products imported from foreign countries.
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Tariff
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Amounts, based on certain expeditures, that a taxpayers can deduct from taxes owed.
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Tax credits
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A person's or business' expenses that can be deducted in determining tax income.
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Tax deductions
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A part of a person's total income on which no tax is imposed
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tax exemptions
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The amoutn of tax that must be paid. Taxpayers meet their federal income tax liability through withholding, estimated tax payments, and payments attached to the tax forms they file with the govern.
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Tax liability
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That process that occurs when a tax that has been levied on one person or group is in fact paid by others.
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Tax shift
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Money that an emplyer takes from an employee's paycheck and that is used to pay part or all of the emplyee's taxes.
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Tax withholding
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The income on which tax is computed.
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Taxable income
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Required payments of money to governs that are used to provide public goods and servies for the benefit of the community as a whole.
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Taxes
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Taxes on economic transactions, such as the sale of goods or services. Such taxes can be based on a set percentage of the sales value or they can be a set amount on physical quantities.
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Transaction Taxes
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The concept that people in different income groups should pay different takes, or different %s of the incomes as taxes. "unequals should be taxed unequally"
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Vertical equity
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A system of complaince that relise on individual citizens to report their income freely and voluntarily, calculates their tax liability correctly, and file a tax return on time.
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Voluntary compliance
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Money that employers withhold from employees paychecks. This money is deposited for the govern. It will be credited against the emplyees tax liability when they file their returns. Employers withhold money for federal income taes, federal social security taxes, and state and local income taxes in some states and localities.
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Withholding
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Claimed by an employee on from W-4. An employer uses the # of allowances claimed, together with income earned and marital status to determine how much income tax to withhld from wages.
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Withholding Allowance
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