Types of Taxes
The type of tax governments impose on the income that businesses and individuals generate.
Income Tax
A tax placed on goods when they cross national borders. The most common type is a tax on imports, which taxes goods brought into a country
Tariffs
Describe the benefit principle of taxation
Those who benefit from government services should pay more - i.e. if you receive gov. Healthcare, you pay more taxes
What are the two types of public sector spending we learned about in class?
Transfer payment payments made to individuals from the gov
Grant-in-aid-payments from one gov agency to another
What is government spending?
A tax charged to individuals in order to fund the Medicare system. The tax is charged to people on their paychecks, much like the Social Security tax.
Medicare Tax
What branch of government has the power to set tariffs?
Congress
Explain the ability-to-pay principle
people should pay more if they make more money, i.e. someone who makes less money is in a lower tax bracket than someone who makes more money
Define and explain spending in the private and public sectors.
Public Sector- spending of local, state, federal governments
Private Sector- spending of private businesses and individuals
When the government gives money to groups to promote production of goods, it is called....
A subsidy
A tax imposed on the sale of goods and services. It is typically a percentage of the purchase price and is added to the final cost of the product or service and varies based on location.
Sales Tax
When can the president impose a tariff?
The president can impose tariffs in cases involving national security or in economic emergencies.
What is the type of tax where everyone receives the same tax RATE regardless of how much they make?
Proportional (Flat) Tax
What is pork spending and why can it be a problem?
Pork spending is the use of NATIONAL dollars to fund LOCAL projects. It is a problem because only benefits a small amount of people.
What is the "push/pull" effect of taxes…
The notion of not paying taxes, but as result no longer have any government benefits.
A tax costing of an annual or semiannual charge levied by a local government and paid by the owners of real estate or property within its jurisdiction.
Property Tax -
FORMULA: [(%rate * 0.01) * $amount]
Which amendment gives the United States the power to collect income taxes
The 16th Amendment
What is the type of tax where given a higher RATE of taxes the more money you make?
Progressive Tax
What are the 3 types of Federal Expenditures?
Mandatory Spending- spending that doesn’t need congressional approval - Social Security, Medicare
Discretionary Spending- spending that does need congressional approval - Education, military
Fiscal Year- spending period that can’t start on January 1
Explain what revenue and expenditures are and describe the differences
Revenue- the money the government makes through taxes
Expenditure- the money that the government will spend with your tax dollars (aka government revenue)
A percentage of gross wages that most employees, employers and self-employed workers must pay to fund the federal program. Certain groups of taxpayers are exempt from paying
Social Security Tax
What is the name of the agency responsible for enforcing and administering federal tax laws, processing tax returns, performing audits, and offering assistance for American taxpayers.
The Internal Revenue Service (IRS) which is part of the U.S. Department of the Treasury
When a person or business is given a lower RATE of taxes for making more money it is called...
Regressive Tax
Explain the concept of a budget deficit
Budget Deficit- the difference in national revenue vs. national expenditures
$4 trillion in revenue - $6 trillion in expenditures means a $2 trillion deficit
What are the 4 main steps to establishing a budget?
Executive Branch creates
House of Representatives votes
Senate votes
Presidential Approval