Studied by 10 people
sin tax
relatively high tax designed to raise revenue and discourage consumption of a socially undesirable product
incidence of a tax
final burden of a tax
tax loophole
exception or oversight in the tax law allowing taxpayer to avoid taxes
individual income tax
tax levied on wages, salaries, and other income of individuals
sales tax
general state or city tax levied on a product at the time of sale
benefit principle of taxation
belief that taxes should be paid according to benefits received regardless of income
ability-to-pay principle of taxation
belief that taxes should be paid according to level of income regardless of benefits received
proportional tax
tax in which percentage of income paid in tax is the same regardless of the level of income
average tax rate
total taxes paid divided by the total taxable income
progressive tax
tax where the percentage of income paid in tax rises as level of income rises
marginal tax rate
tax rate that applies to the next dollar of taxable income
regressive tax
tax where percentage of income paid in tax goes down as income rises
payroll withholding system
system that automatically deducts income taxes from paychecks on a regular basis
Internal Revenus Service (IRS)
branch of Treasury Department that collects taxes
tax return
annual report filed with local, state, or federal government detailing income earned and taxes owed
indexing
adjustment of tax brackets to offset the effects of inflation
FICA
Federal Insurance Contributions Act; tax levied on employers and employees to support Social Security and medicare
medicare
federal health-care program for senior citizens, regardless of income
payroll tax
tax on wages and salaries to finance Social Security and medicare costs
corporate income tax
tax on corporate profits
excise tax
general revenue tax levied on the manufacture or sale of selected items
luxury good
good for which demand increases faster than income when income rises
estate tax
tax on the transfer or property when a person dies
gift tax
tax on donations of money or wealth that is paid by the donor
customs duty
tax on imported products
user fees
fees paid for the use of good or service; form of a benefit tax
accelerated depreciation
schedule that spreads depreciation over fewer years than normal to generate larger tax reductions
investment tax credit
tax credit given for purchase of equipment
surcharge
additional tax or charge added to other charges already in place
alternative minimum tax
personal income tax rate that applies to cases where taxes would otherwise fall below a certain level
capital gains
profits from the sale of an asset held for 12 months
value-added tax (VAT)
tax on the value added at every stage of the production process
flat tax
proportional tax on individual income after a specified threshold has been reached
