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15 Cards in this Set

  • Front
  • Back

Power to tax

-The constitution gives Congress the power to tax.


-Taxing power raises money needed to operate the Federal government.


-May be used to regulate or discourage an activity that the government believes to be harmful to the general public.



Constitutional limitations on taxing

Expressed limitations:


- Taxes may be levied only for public purposes.


- Prohibits export taxes.


-Direct taxes must be distributed evenly among the states.


- All indirect taxes must be set at the same rate in all parts of the country.


Implied limitations:


- Federal government cannot tax any state or local government in the exercise of their governmental functions.


-Cannot tax a church.

Federal Taxes



- Income taxes.


- A tax levied on a person's or corporation's income during the previous year.


-Largest source of federal income today.


Progressive tax- the higher a person's income, the higher the tax rate.


- Congress can change the percentage pf the tax.


Payroll Taxes- a tax applied to a percentage of a person's salary, matched by the employer, to fund specific social insurance programs.


Regressive Tax- Taxes levied at a fixed rate, no matter a person's income level or his ability to pay them.


Excise Tax- A tax laid on the manufacture, sale or consumption of goods and/ or services.


-A tax placed on gasoline,oil,tires,liquor,wine,beer,firearms,telephone services,airline tickets, etc.


Estate Tax- Tax levy imposed on the assets of someone who dies.


a. Amount in estate in order to be taxed:5.45 million or above.


Gift Tax- Tax imposed on a gift from one living person to another.


Customs Duties- Taxes laid on goods brought into the US from abroad.


-This used to be the tax that brought in the most money to the US in our first 100 years(before we created income tax).







Taxing for Non Revenue Purposes

- There are goods the government taxes not for the sole purpose of making money, but instead to try and dissuade consumers from purchasing these goods or producers from creating them.



Non tax revenues

- Most come from interest on loans made by the federal government.


-Other sources: interest on other loans, passport,copyright,patent,trademark fees, the sale or lease of federal lands, court fines.


Interest- A charge for borrowed money.

Federal spending

- Just since the Great Depression and WWII, the Government started spending large amounts of money.


Spending Priorities- Most money spent financing the Social Security Administration and the Health and Human Services Department for Entitlements.


Entitlements- Benefits that the federal law says must be paid to all those who meet the eligibility requirements.


-Second largest spending category of spending is defense spending.


-Third largest category of spending is paying of the interest and loans of public debt.


Controllable Spending- Items included in the federal budget that Congress and the President have allocated funds for Discretionary spending.


Uncontrollable Spending- Spending the President and Congress have no power to change directly. Mandatory Spending.


-Federal budget is created through a joint process involving the President and Congress.

Deficit

- The government spending more money than it makes in one year.

Surplus

-the government making more money than it spends in one year.

Debt

-All the money the government has borrowed and not yet repaid, plus the interest on that borrowing.

Demand Side economics

-the government spends a lot of money to create jobs and stimulate the economy, even if it means going into debt.



Supply side economics

-give tax cuts to the rich and businesses to stimulate the economy.Private businesses will create more jobs.



Gross Domestic Product

-the total value of all goods and services produced within the US in one year.

inflation

an increase in prices throughout the economy.

deflation

-a decrease in prices throughout the economy.

recession

-where there is absence of growth and the economy shrinks.