Econ Unit 5 Vocab

transfer payments

payment for which the government receives neither goods nor services in return

discretionary spending

spending for federal programs that must receive annual authorization

entitlements

program on benefit using established eligibility requirements to provide health, nutritional, or income supplements to individuals

individual income tax

tax levied on wages, salaries, and any other income of individuals

progressive tax

tax where the percentage of income paid in taxes rise as income rises

regressive tax

tax where the percentage of income paid in taxes goes down as income rises

value added tax

tax on the value added at every stage of the production process

federal budget surplus

federal budget that shows a positive balance after expenditures are subtracted from revenues

deficit spending

annual government spending in excess of taxes and other revenues

line item veto

power to cancel specific budget items without rejecting the entire budget

mandatory spending

federal spending authorized by law that continues without the need for annual approvals of Congress

fiscal year

12 month financial planning period that may not coincide with the calendar year

spending caps

limits on annual discretionary spending

proportional tax

tax in which the percentage of income paid in taxes is the same regardless of the level of income

estate tax

tax on the transfer of property when a person dies

property tax

tax on tangible and intangible possessions such as real estate, buildings, stocks, bank accounts, etc

corporate income tax

tax on corporate profits

federal budget deficit

excess of federal expenditures over tax and revenue collection

crowding out effect

high than normal interest rates and diminished access to financial capital faced by private investors when the government increases it’s borrowing in financial markets

federal budget

annual plan outlining proposed expenditures and anticipated revenues

trust fund

special account used to hold revenue designated for specific expenditures such as Social Security, Medicare, etc

sales tax

general state or city tax levied on a product at the time of sale

gift tax

tax on donations of money or wealth that is paid by the donor

excise tax

general revenue tax levied on the manufacture or sale of specific items

flat tax

proportional tax on individual income after a specific threshold has been reached

FICA (Federal Insurance Contributes Act)

tax levied on employers and employees to support social security and Medicare

Medicare

federal health - care program for senior citizens regardless of income

federal debt

total amount of money the federal government has borrowed from others

balanced budget amendment

constitutional amendment requiring the government to spend no more than it collects in taxes and other revenues, excluding borrowing

capital gains

profits from the sale of an asset held for 12 months