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100
Define "budget deficit"
What is... government spending > government receipts
100
Define "lump sum tax"
What is... one flat tax amount for everyone, regardless of their wealth or income.
100
Define "marginal tax rate"
What is... the extra amount a tax payer pays for each extra dollar of income the earn.
100
What is the average tax equation?
What is... (total taxes paid) / (total income)
100
Define "budget surplus"
What is... government receipts > government spending
200
-Joe makes $10 dollars and is taxed $1. -Jane makes $100 and is taxed $30. This is an example of a _________ tax system.
What is... a progressive tax system.
200
Income tax, payroll tax, corporate income tax, and excise tax are all examples of _____________.
What is... federal government revenues (receipts).
200
Define "government receipts"
What are... government revenues.
200
The two metrics for evaluating a tax policy
What are... equity and efficiency
200
Also known as "the most efficient tax possible"
What is... the lump sum tax
300
High tax rates affect inelastic goods _______(more/less) than they affect elastic goods. Therefore, taxes on inelastic goods are ______(more/less) efficient than taxes on elastic goods.
What is... High tax rates affect inelastic goods **more** than they affect elastic goods. Therefore, taxes on inelastic goods are **more** efficient than taxes on elastic goods.
300
The two major principles of equity.
What are... the benefits principle and the ability-to-play principle
300
Define "vertical equity"
What is...a system in which people with more money are charged more taxes than people with less money, such that their tax burden is equitable.
300
Name the single largest federal expenditure
What is... social security
300
Name the single largest state expenditure
What is... public education
400
The two "costs" of taxes (other than the taxes themselves) captured in tax efficiency measures
What is... 1) distortions/perversions in incentives 2) compliance (documenting, computing, avoiding)
400
The tax rate that represents "how much people are discouraged from working"
What is... the marginal tax rate
400
The principle that seeks "to make public goods private"
What is... the benefits principle
400
Define "horizontal equity"
What is... people in the same income/wealth bracket are charged the same amount
400
-Joe makes $10 and is taxed $1 -Jane makes $100 and is taxed $10 This is an example of a ______ tax system
What is... a proportional tax system
500
The size of the 2009 US federal deficit
What is... $1.4 trillion (10% of GDP)
500
Jane makes $100; the first $50 is taxed at a rate of 10% and the next $50 is taxed at a rate of 20%. What is the marginal tax rate for $52? What is her average tax rate?
What is... marginal tax rate for $52 = 20% average tax rate is 15%
500
Joe wants a tax on gasoline to help fund road maintenance. He thinks this is fair because the more you drive (ie, the more gas you use) the more you use the roads. This is an example of _____________.
What is... the benefits principle
500
Consumption taxes charge everyone the same amount for basic necessities (food, fuel, etc.) regardless of their ability to pay, making them an example of a __________ tax system.
What is... a regressive tax system
500
Joe makes $100 and Jane makes $10000, but they are both taxed a flat tax of $50. This is an example of a _______ tax.
What is... a lump sum tax.