Government Taxation and Spending

A series of flashcards covering key terms and definitions related to taxation, spending, and economic policies.

Taxes

Payments people are required to pay local, state, and national governments, used to pay for services provided by government.

Progressive Tax

Tax designed to take a larger percentage of income from the wealthy than the poor; income tax with tax brackets.

Regressive Tax

Tax which takes a higher percentage of income from the poor than from the rich; an example is sales tax.

Proportional Tax

A tax that takes the same percentage of income from both the wealthy and poor; often referred to as a 'flat tax'.

Tax Withholding

The process by which employers take tax payments out of an employee's pay before he or she receives it.

Tax Brackets

Ranges of income that are taxed at different rates in a progressive tax system.

Tax Returns

Documents individuals file with information regarding exemptions and deductions that adjust the amount of tax owed.

FICA Tax

Provides funds for older Americans, their survivors, and disability insurance; also known as the Federal Insurance Contributions Act.

Excise Tax

Tax on the sale or production of a specific good.

Estate Tax

Tax on the total value of money and property of a person who has died; often referred to as the 'Death Tax'.

Gift Tax

Tax on money or property given as a gift over $10,000 per year.

Import Tax

Known as tariffs, taxes on goods entering the U.S.

Entitlement Programs

Social welfare programs that people are 'entitled to' if they meet certain requirements.

Discretionary Spending

Spending category where government can choose how to allocate funds.

Balanced Budget

When the government collects the same amount in revenue (taxes) as it spends.

Budget Surplus

When the government takes in more revenue than it spends.

Budget Deficit

When the government spends more money than it takes in.

Constitutional Grants of Taxation Powers

Article 1, Section 8, clause 1 grants Congress the power to tax; the 16th amendment allows for income tax.

Limitations on Taxes

1. Must provide for common defense and general welfare 2. Federal taxes must be uniform across states 3. Exports cannot be taxed.

State/Local Taxes

Include sales tax, excise tax, state income tax, corporate income tax, and property tax.

Five Categories of Spending

Education, public safety, highways and transportation, public welfare, arts and recreation.

Hidden Costs

Additional expenses such as insurance, traffic fines, rising fuel costs, and tolls.

Solutions to Rising Gas Prices

Use hybrid vehicles, switch to electric cars, develop hydrogen fuel technology, and utilize biodiesel.

Regressive →

poor pay a higher %Proportional →

Proportional →

everyone pays the same %

Mandatory Spending →

required by law, not easily controlled