Understanding Taxes

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Last updated 3:34 AM on 9/22/23
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13 Terms

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IRS
Internal Revenue Service; government organization responsible for collecting taxes.
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Taxes
Revenue from Congress (Article 1 of Constitution); income received by a government from taxes + other nontax sources; provides public goods (roads, schools, law enforcement, etc.).
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Progressive Tax
As income increases, the percentage of income tax increases.
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Proportional Tax (Flat Tax)
The percentage of income tax stays the same at all income levels.
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Regressive Tax
As income increases, the percentage of income tax decreases (sales tax, excise tax/sin tax).
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Sales Tax
A tax imposed on the sale of goods and services.
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Tax Base
The population.
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16th Amendment
Legalized income taxes.
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Congress
Cannot tax religious services/facilities, voting (poll tax), exports.
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Simplicity (Characteristics of Taxes)
Easy to understand, predictable schedule.
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Efficiency (Characteristics of Taxes)
Able to pay/collect without giving up a lot of time or fees.
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Certainty (Characteristics of Taxes)
Clear due dates, clear payment method.
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Equity (Characteristics of Taxes)
The tax system should be fair; no one has too little or too many taxes.