Business Cycles and Taxation Concepts

These flashcards cover key concepts related to business cycles and taxation, helping students prepare for exams.

Incidence of a tax

The final burden of a tax.

Marginal tax rate

A proportional tax on individual income after a specified threshold has been reached.

Value added tax

Tax on the value added at every stage of the production process.

Alternative minimum tax

A personal income tax rate that applies in cases where taxes would otherwise fall below a certain level.

Long term capital gains

Profits from the sale of an asset held for 12 months or longer.

Excise tax

General revenue tax levied on the manufacture or sale of selected items.

Earmark

A line item budget expenditure that circumvents normal budget processes and benefits a small number of people or businesses.

Transfer payments

Payments for which the government receives neither goods nor services in return.

Public debt

The total amount borrowed from investors to finance the government's deficit spending.

Intergovernmental grants

Funds that one level of government receives from another level of government.

Sin tax

A tax meant to raise revenue while reducing consumption of a socially undesirable product.

Progressive income tax

An income tax that is considered effective because it is equitable.

National sales tax

Similar to a value-added tax (VAT).

Debt ceiling

A requirement that new spending proposals or tax cuts must be offset by reductions elsewhere.

Indexed tax code

A tax code adjusted to compensate for inflation.

Largest source of federal revenue

Individual income tax.

Largest federal expenditure

National defense.