Lesson 11: Part 1
True or False: The Constitution grants the government the power to borrow money.
True
A side effect or a consequence.
Externality
Someone who makes $70,000 a year belongs to which social class.
Middle Class
mandatory payment to the government.
Taxes
something that is taxed, such as personal income or a piece of property. If you pay taxes, you’re a part of the tax base.
Tax Base
Government Agency responsible for issuing federal income tax forms and processing tax returns.
Internal Revenue Service or IRS
the legal entitlements that define who owns and can control a specific resource, encompassing the rights to use, exclude others, dispose of, and benefit from that resource, whether tangible or intangible.
Property Rights
A resource that everyone has access to and that can easily be overused or destroyed. Examples include the atmosphere and the oceans
Common Resource
The percentage of the population that has a family income below a government-defined threshold, or poverty line.
Poverty Rate
the basic public facilities and installations that help an economy function, including roads, bridges, airports, power and water systems, and other utilities
Infrastructure
The percentage that is levied on the value of whatever is being taxed, such as income or property.
Tax Rate
A tax that takes the same share of income at all income levels. A proportional income tax applies the same tax rate to all taxpayers, regardless of income.
Proportional or Flat Tax
What is the one major exception to property rights?
Eminent Domain
The power of a government to take an individual’s property for public use if the owner is fairly compensated
Eminent Domain
the uneven distribution of income among individuals or groups within a society, where some people have significantly more income than others, leading to a wide gap between the rich and the poor.
Income Inequality
the idea that citizens should be taxed according to their income or wealth. In this system, the wealthier pay more in taxes.
Ability to Pay Principle
a system in which employers deduct a certain amount of tax from workers’ paychecks
Withholding
A tax that takes a larger share of income as income increases.
Progressive Tax
Name one thing that the Federal Trade Commission (FTC) regulations
Answers may vary, but three possible answers are:
- Price Fixing
- Bid Rigging
- Market Division
The establishment, by the government, of rules aimed at influencing the behavior of firms and individuals. Regulation can involve setting prices, establishing product and workplace standards, and limiting entry into an industry.
Regulation
the ability of people to raise their standard of living and improve their economic status.
Economic Mobility
the idea that citizens who benefit from a particular government program should pay for it. If you use roads or bridges, you should pay for them.
Benefits Received Principle
an official document that lists a worker’s wages for the previous year and the amount of tax that was withheld
W-2 Form
A tax that takes a smaller share of income as income increases.
Regressive Tax
Describe the Tragedy of the Commons
Up to Mr. Reynolds' discretion
the supplying of a good or service by the government; examples include the services provided by publicly supported schools and universities
Public Provision
a policy designed to reduce income inequality by taking money from the rich and distributing it to the poor. Usually this is done through taxes and social programs such as welfare or social security.
Income Redistribution
What are the four Maxims of Taxation according to Adam Smith
Equity, Certainty, Convenience, Efficiency
If you have a proportional tax system, how much would someone pay in taxes if their taxable income was $60,000 a year at a tax rate of 15%.
$9,000
Proportionally, who pays the majority of taxes
The Poor/Lower/Middle Class, up to Mr. Reynolds' discretion.