Vocab
tax expenditures
revenue losses that result from special exemptions, exclusions, or deductions allowed by federal law
what does it mean when income tax is generally progressive?
those with more income pay more taxes and pay higher rates of tax
How does the federal government borrow money?
The Treasury Department sells bonds guaranteeing to pay interest to bondholders. Citizens, corporations, mutual funds, other financial institutions, and even foreign governments may purchase these bonds.
why doesn't Government lower overall tax rates by taxing things it doesn’t currently?
this could also evoke strong opposition from powerful interest groups
deficit
an excess of federal expenditures over federal revenues
Major sources of federal revenue
personal income taxes, corporation income taxes, and social insurance taxes
what is a debt ceiling?
a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may borrow.
who benefits most from tax expenditures?
middle and upper-income taxpayers
income tax
shares of individual wages and corporate revenues collected by the government
What did the Sixteenth Amendment allow?
allowed Congress to levy an income tax
Why is it bad for the government to borrow money when the economy is doing good?
The government's competing to borrow money may lead to increased interest rates, making it more difficult for businesses to invest in capital expenditures that produce economic growth, and raising the costs to individuals of financing homes or credit card purchases.
What can happen after substantial tax cuts?
Government often grows more rapidly following substantial tax cuts
expenditures
what were the origins of income tax?
it was to pay for Civil War
what is the national debt today?
about 20.1 trillion
why are tax expenditures considered "obscure"?
They receive no regular review by congress