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Definitions
Types of taxes
Lists
Examples
100
What is a tax?
A required payment to a state or national government.
100
Do you have to be 18 to pay income tax?
No.
100
Name the 4 main types of tax bases.
Income, sales, property, profits.
100
Give an example of the ability to pay principle.
People who make more money pay more taxes.
200
What is revenue?
Income received by a government from taxes.
200
What is the primary way that the government collects the money it needs to operate?
Taxes
200
Name 5 things that the government uses revenue for.
National defense, highways, education, law enforcement, social services
200
Give an example of the benefits received principle.
People who drive pay gas taxes that are used to maintain highways.
300
What is a tax base?
The thing that is subject to a tax.
300
What is a proportional tax?
A tax for which the percentage of income paid in taxes remains the same for all income levels.
300
Name 4 limits that the Constitution places on the federal government's ability to tax.
1. Cannot bring in money for individual interests. 2. Cannot be different in each state. 3. Cannot tax church services. 4. Cannot tax exports.
300
Give an example of a proportional tax.
Mary makes $1,000 and Joe makes $2,000, and both are taxed at 6% of their income
400
What is the benefits received principle?
Theory that a person should pay taxes based on the level of benefits he expects to receive.
400
What is a progressive tax?
A tax for which the percentage of income paid in taxes increases as income increases.
400
Name 4 characteristics of a good tax.
1. Simplicity 2. Efficiency 3. Certainty 4. Equity
400
Give an example of a progressive tax.
Mary makes $1,000 and is taxed at 6% of her income. Joe makes $2,000 and is taxed at 10% of his income.
500
What is the ability to pay principle?
Theory that people should pay taxes according to their ability to pay.
500
What is a regressive tax?
A tax for which the percentage of income paid in taxes deceases as income increases.
500
Explain what the following mean in relation to characteristics of a good tax: 1. Simplicity 2. Efficiency 3. Certainty 4. Equity
1. Simplicity: tax laws are easy to understand 2. Efficiency:Taxes can be paid and collected without spending too much time or money 3. Certainty:It is clear to the taxpayer when and how taxes should be paid. 4. Equity:No one pays too much or too little taxes
500
Give an example of a regressive tax.
Mary makes $1,000 and pays $100 in sales taxes. Joe makes $2,000 and pays $100 in sales taxes. Mary's tax bill is 10% of her income and Joe's tax bill is 5% of his income.