Introduction to Taxation and Tax Systems

Flashcards covering tax bases, rates, proportional, progressive, regressive tax systems, double taxation, capital gains, and dynamic tax analysis.

The three primary sources from which the government gets funds are user fees for government services, taxes, and __________.

borrowing money

The __________ is defined as all goods, services, wealth, or income subject to taxation.

tax base

Marginal tax rate is calculated as the change in tax payment divided by the change in __________.

income

Average tax rate is calculated by dividing total tax payment by __________ income.

total

In a proportional tax system, the marginal tax rate and the average tax rate are __________ to one another.

equal

In a progressive tax system, as income increases, the marginal tax rate is always __________ than the average tax rate.

higher

In a regressive tax system, the marginal tax rate is always __________ than the average tax rate.

less

The primary example of a regressive tax system mentioned in the lecture is __________.

Social Security

Federal personal income tax accounts for __________ of all tax revenue collected by the federal government.

$$47\%$$

A __________ gain is defined as the positive difference between the purchase price and the selling price of an asset.

capital

__________ occurs when profit earned by a corporation is taxed at the corporate level and taxed again as personal income when distributed as dividends.

Double taxation

Earnings that a corporation saves for investment in productive activity rather than distributing as dividends are called __________ earnings.

retained

Tax __________ refers to the distribution of the tax burden among various groups in society.

incidence

The total Social Security tax rate collected per employee, combining the employee's $6.2\%$ and the employer's match, equals __________.

$$12.4\%$$

__________ tax analysis recognizes that raising tax rates causes taxpayers to alter their behavior and seek ways to avoid taxes.

Dynamic