Taxation and the Public Budget - chapter 20

Proportional

________ (flat) tax: a tax that takes the same percentage of income from all taxpayers.

Incidence

a description of who bears the burden of a tax.

Deadweight loss

a loss of total surplus that occurs because the quantity of a good that is bought and sold is below the market equilibrium quantity.

Revenue

________ collected at a certain time and place can pay for expenditures in a different time or place, and the federal government can and does borrow money to pay for current expenses.

Entitlement spending

public expenditure that "entitles "people to benefits by virtue of age, income, or some other factor.

economic incidence

The ________ of the tax describes who ultimately bears the burden of the tax and isn’t necessarily the same as the statutory incidence of the tax, which describes who is legally obligated to pay it.

Budget deficit

the amount of money a government spends beyond the revenue it brings in.

Budget surplus

the amount of revenue a government brings in beyond what it spends.

Discretionary spending

public expenditures that have to be approved each year.

administrative burden

the logistical costs associated with implementing a tax

deadweight loss

a loss of total surplus that occurs because the quantity of a good that is bought and sold is below the market equilibrium quantity

lump-sum tax (head tax)

a tax that charges the same amount to each taxpayer, regardless of their economic behaviour or circumstances

Incidence

a description of who bears the burden of a tax

proportional (flat) tax

a tax that takes the same percentage of income from all taxpayers

progressive tax

one in which low-income people are taxed a smaller percentage of their income than is charged to high-income people

regressive tax

a tax that charges low-income people a larger percentage of their income than it charges high-income people

income tax

a tax charged on the earnings of individuals and corporations

payroll tax

a tax on the wages paid to an employee

Consumption tax

a tax that is charged on the value of a good or service being purchased

excise taxes

a sales tax on a specific good or service

property tax

a tax on the estimated value of a home or other property

marginal tax rate

the tax rate charged on the last dollar a taxpayer earns

capital gains tax

a tax on income earned by buying investments and selling them at a higher price

discretionary spending

public expenditures that have to be approved each year

entitlement spending

public expenditure that "entitles" people to benefits by virtue of age, income, or some other factor

budget deficit

the amount of money a government spends beyond the revenue it brings in

budget surplus

the amount of revenue a government brings in beyond what it spends