Chap. 19 Taxes: Equity Vs. Efficiency (Key Terms)

Personal Income (Pl)

Income received by households before payment of personal taxes.

In-Kind Income

Goods and services received directly, without payment, in a market transaction.

Wealth

The market value of assets.

Size Distribution of Income

The way total personal income is divided up among households or income classes.

Income Share

The proportion of total income received by a particular group.

Lorenz Curve

A graphic illustration of the cumulative size distribution of income; contrasts complete equality with the actual distribution of income.

Gini Coefficient

A mathematical summary of inequality based on the Lorenz curve.

Progressive Tax

A tax system in which tax rates rise as incomes rise.

Marginal Tax Rate

The tax rate imposed on the last (marginal) dollar of income.

Tax Elasticity of Supply

The percentage change in quantity supplied divided by the percentage change in tax rates.