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3 main purposes of taxes
revenue, discourage unwanted behavior, encourage desired behavior
3 categories for government spending
mandatory 66%, discretionary 26%, interest 8%
2 countries that own significant U.S. debt
Japan, China
Term for required payments to the government
taxes
What is needed for governments to fund programs?
revenue
Where does most revenue come from?
taxes
True or False: Most government programs improve our quality of life
true
discourages undesirable behavior
sin tax
the value of the activities or assets subject to the tax
tax base
a specific percentage of the tax base that is paid in taxes
tax rate
Three regions of government that can charge taxes:
federal, state, and local
When are Federal income taxes due
April 15
a form you will complete and submit to the government when you pay your income taxes
tax return
To whom do you return your tax return documents
Internal Revenue Service (IRS)
The IRS is part of what Executive agency?
The U.S. Department of Treasury
examination of tax records to make sure an individual or firm paid the correct amount of taxes
audit
True or False: All states collect a state income tax.
false
a tax collected from employers on the basis of the wages and salaries paid to workers
payroll tax
What is the largest payroll tax?
social security tax
What % does the employee pay towards Social Security taxes?
6.2%
What % does the employer pay towards Social Security taxes?
6.2%
If you are self-employed what is the % you paid towards Social Security taxes?
12.4%
covers health insurance over the age of 65, unemployment, disability
medicare tax
a tax on corporate profits that is paid directly by the corporation
corporate tax
True/False: Corporate tax in the U.S. dropped from 35% to 21%
true
What is the advantage of a low corporate tax rate
Encourages businesses to operate in the U.S. and allows them to have more money to invest
What is the advantage of a high corporate tax rate
Higher taxes equals more revenue for the government
True/False: Corporations pay taxes since they are considered a legal individual
true
a required payment made by the owners of property
property tax
True/False: Alabama has a high property tax rate
false
True/False: The state of Alabama has a 4% sales tax rate
true
collected from consumers by firms when a taxed good or service is purchased
sales tax
tax on sales of a specific good, such as gasoline, and is typically assessed as a certain amount of money per unit rather than a percentage of the price
excise tax
What is an example of an excise tax?
tobacco
True/False: Compared to other countries the United States has a high tax rate.
false
the value of goods and services produced within the country in a given year
GDP
What does GDP stand for?
gross domestic product
Country with the highest taxes?
Denmark
True/False: You will pay a gift tax on any gift over the amount of $10,000
false
True/False: An increase in a tax rate would increase demand even though the price of the product did not change.
false
True/False: An increase in a tax rate placed on the company could decrease the amount of a good supplied or the company could decide to increase the price of the good to cover the tax.
true
True/False: It is everyone’s civic duty to pay taxes.
true
True/False: A person who does not pay taxes can be arrested for tax evasion.
true
People with a higher income pay a higher share of their income in taxes
progressive tax
What is an example of a progressive tax?
U.S. income tax
People with a higher income pay a lower share of their income in taxes
regressive tax
What is an example of a regressive tax?
U.S. sales tax
everyone pays the same share of their income in taxes, regardless of their income
proportional tax
What is another name for proportional tax?
flat tax
you fill it out when hired so your employer will know how much to withhold from your paycheck for taxes
W-4
needed to fill out taxes, tells you how much you made in a year and how much was withheld for taxes
W-2
tells you how much interest you made in a year
1099
tells you how much you made in dividends in a year
1099-DIV
form used to fill out your taxes
1040
Internal Revenue Service
IRS
What is the estimated interest on the U.S. debt in 2022?
476 billion
What is the approximate U.S. debt?
33.6 trillion
What is most of the discretionary funding spent on?
defense
When does the fiscal year start?
October 1
Who was the President responsible for a surplus in 1999, 2000 and 2001? What party did he belong to? What party controlled congress during these years?
Bill Clinton, Democratic, Republican
Income before taxes
gross income
Income after taxes
net income