Tax Basics
What is a tax?
The largest source of revenue for the U.S. government, it is a progressive tax on a family's or an individual's income.
What is the personal income tax?
The idea of the fairness of a tax.
What is equity?
The "nah" gap, basically the money/happiness/value that just disappears.
What is deadweight loss?
This term describes who actually bears the cost of a tax after market adjustments.
What is tax incidence?
The percentage that determines how much you must pay for a tax
What is the tax rate?
A regressive tax on earnings from work, starting on the first dollar until an upper limit that increases each year.
What is the payroll tax?
The belief that equally situated people should be taxed equally.
What is horizontal equity?
If it gets the government money without changing what people buy, sell, or how much they work.
What is tax efficiency?
The side of the market that is more "this" will bear more of the tax burden.
What is inelastic?
When the fraction of income paid on a tax remains constant without regard to the individual's wealth.
What is a proportional tax?
A tax on the purchase of specific goods, like cigarettes and alcohol with the intent to reduce the use/consumption of these goods.
What is an excise/sin tax?
The belief that differently situated people should be taxed differently, within reason.
What is vertical equity?
This term refers to legal ways people avoid taxes by shifting income or exploiting rules.
What are tax loopholes?
Who actually takes the hit after prices adjust vs who the law says pays
What is economic incidence vs statutory incidence?
The fraction of additional dollar that is paid to the tax collector
What is the marginal tax rate?
A “direct” tax on the profits of corporations after all expenditures on wages, interest, rent, and purchases of other inputs are deducted.
What is corporate income tax?
The belief that those able to pay should pay the highest tax.
What is the ability-to-pay principle?
Loopholes often create inefficiency because they encourage people to make decisions based on taxes rather than this fundamental economic principle.
What is maximizing real economic value (or true opportunity cost)?
When a tax reduces a negative externality, it increases overall efficinecy this is ___.
What is a corrective tax?
A tax levied on specific economic activities rather than people.
What is an indirect tax?
Outside of medicare, the "trust fund" money from payroll taxes help fund this. Working on a pay-as-you-go method, the money made by current workers is used to support current retirees.
What is social security?
The idea that people who benefit from government services should pay the subsequent tax for the service.
What is the benefits principle?
When the person who legally pays the tax is not necessarily who really pays
What is shifting the tax burden?
Zoe and Jadyn's presentation.
What is "the best presentation"?