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Economics of Taxation
The Federal Tax System
State and Local Taxes
Current Tax Issues
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100
A relatively high tax designed to raise revenue and reduce consumption of a socially undesirable product such as liquor or tobacco.
What is sin tax.
100
An annual report to the IRS summarizing total income, deductions, and the taxes withheld by employers.
What is tax return.
100
The person who assigns value to property for tax purposes.
What is tax assessor.
100
A reduction in business taxes that are tied to investment in new plants and equipment.
What is investment tax credit.
100
A proportional tax on individual income after a specified threshold has been reached.
What is flat tax.
200
A general tax levied on most consumer purchases.
What is sales tax.
200
A federal health care program available to all senior citizens, regardless of income.
What is Medicare.
200
The summary statement attached to a paycheck that summarizes income, tax withholdings, and other deductions.
What is payroll withholding statement.
200
A 5% additional tax above and beyond the base tax rate.
What is surcharge.
200
The U.S. does not currently have this tax, although it is widely used in Europe.
What is value-added tax (VAT).
300
The tax on people's earnings.
What is individual income tax.
300
The tax a corporation pays on its profits.
What is corporate income tax.
300
A tax on tangible and intangible possessions such as real estate, buildings, furniture, automobiles, farm animals, stocks, bonds, and bank accounts.
What is property tax.
300
Profits from the sale of an asset held for 12 months (reduced from 28 to 20 percent).
What is capital gain.
300
A system that requires an employer to automatically deduct income taxes from an employee's paycheck and send it directly to the government.
What is payroll withholding system.
400
A tax that imposes a higher percentage rate of taxation on persons with higher income.
What is progressive tax.
400
The branch of the U.S. Treasury Department in charge of collecting taxes.
What is the Internal Revenue Service (IRS).
400
Funds collected by one level of government that are distributed to another level of government for expenditures.
What is intergovernmental revenue.
400
A tax placed on the value that manufacturers add at each stage of production.
What is value-added tax (VAT).
400
Types of taxes that are deducted from your paycheck, including FICA and Medicare.
What are payroll taxes.
500
Total taxable income divided by the total income and is constant, regardless of income.
What is average tax rate.
500
An upward revision of the tax brackets to keep workers from paying more in taxes just because of inflation.
What is indexing.
500
The 2nd largest source of revenue for states, accounting for 20% of total revenue collected.
What is sales tax.
500
Larger than normal depreciation charges which allow firms to reduce federal income tax payments.
What is accelerated depreciation.
500
The final burden of the tax which can be predicted with the help of a supply and demand analysis.
What is incidence of a tax.