Macroeconomics - Chapter 6 - Funding the Public Sector

Flashcards covering taxation systems and concepts from the lecture notes.

Tax base

The value of the goods, services, wealth, or income that is being taxed

Tax rate

The proportion of the tax base that is paid as taxes

Proportional taxation

The tax rate is the same regardless of income

Progressive taxation

Tax rates rise as income rises

Regressive taxation

Tax rates fall as income rises

Sales tax

A tax on the price paid for most goods and services

Excise tax

A tax on purchase of a specific good or service (gasoline, tobacco, etc.)

Government budget constraint

Every dollar the government spends on goods, services, transfers, or to repay borrowed funds must be funded by user charges and taxes