Key Terms 1
a required payment to a local, state, or national government.
tax
The income received by a government from taxes and other nontax sources is
revenue
the final burden of a tax.
incidence of a tax
are amounts that you can subtract, or deduct, from your gross income.
Tax deductions
Identify Main Ideas According to the Constitution, for what purpose can government collect taxes?
to pay the nation’s debts and provide for its defense and welfare
a tax for which the percentage of income paid in taxes increases as income increases.
progressive tax
is a tax for which the percentage of income paid in taxes remains the same at all income levels.
proportional tax
aking payments out of your pay before you receive it.
withholding
is an amount that you can subtract from the total amount of your income tax.
tax credit
Recall What is the tax structure of the federal individual income tax?
progressive
is a tax for which the percentage of income paid in taxes decreases as income increases.
regressive tax
a tax based on goods or services that are sold
sales tax
is a form used to file income taxes.
tax return
is a tax on the estate, or total value of the money and property, of a person who has died.
estate tax
consumers
is the income, property, good, or service that is subject to a tax.
tax base
is based on a person’s earnings.
individual income tax
is a person’s gross (or total) income minus exemptions and deductions.
Taxable income
is a tax on the money or property that one living person gives to another.
gift tax
Check Understanding Economists generally agree that taxes ought to be
simple, efficient, certain, and fair.
uses a company’s profits as its base
corporate income tax
is based on real estate and other property.
property tax
are set amounts that you subtract from your gross income for yourself, your spouse, and any dependents.
Personal exemptions
Taxes on imported goods (foreign goods brought into the country) are
called tariffs.
Define What is a person’s taxable income?
gross income minus exemptions and deductions