Economics Chapter 14 Flashcards

Taxation Concepts

• Tax: Mandatory payments made to governmental bodies at local, state, or national levels.
• Revenue: Income generated by the government from taxes and other sources besides taxation.
• Tax Base: The certain income, property, goods, or services that can be taxed.

Types of Taxes

• Individual Income Tax: Tax imposed on personal income earned by individuals.
• Sales Tax: Tax applied to the selling price of goods and services.
• Property Tax: Tax levied on the assessed value of real estate properties.
• Corporate Income Tax: Tax on a corporation’s profits.

Tax Structures

• Proportional Tax: Tax system where the tax rate remains constant regardless of income level.
• Progressive Tax: Tax system where the tax rate increases as the taxpayer's income increases.
• Regressive Tax: Tax system where the tax rate decreases as taxpayer income increases.

Tax Liability and Payment

• Incidence of a Tax: Refers to who ultimately bears the burden of the tax.
• Withholding: Process of deducting tax from an employee's paycheck before it is received.
• Tax Return: Official document filed to report income and calculate taxes owed.

Taxable Income and Deductions

• Taxable Income: Income subject to taxes, calculated by subtracting deductions and exemptions from total income.
• Personal Exemption: Fixed amount deducted from gross income for the taxpayer, spouse, and dependents.
• Deductions: Variable expenses that reduce gross income, lowering taxable income.

Specific Tax Types

• FICA: Tax that supports Social Security and Medicare programs.
• Social Security: Insurance program for retirees and those with disabilities; includes Old Age, Survivors, and Disability Insurance (OASDI).
• Medicare: National health program aiding those over 65 or with qualifying disabilities.
• Estate Tax: Tax imposed on the total value of a deceased person's estate.
• Gift Tax: Tax charged on transfers of money or property from one individual to another.
• Tariff: Tax applied to goods imported into a country.

Government Spending

• Tax Incentive: Tax policy designed to motivate certain behaviors or activities.
• Mandatory Spending: Government expenditure mandated by existing laws, affecting programs that must be funded.
• Discretionary Spending: Budgetary allocation that government planners can adjust based on priorities.

Welfare and Budgeting

• Entitlement: Government program that guarantees benefits to individuals who meet established criteria.
• Medicaid: Entitlement program providing health services to low-income families, disabled individuals, and elderly nursing home residents.
• Operating Budget: Budget for ongoing operational costs and daily expenses.
• Capital Budget: Budget allocated for significant capital expenditures and investments.
• Balanced Budget: Financial plan where total revenues match total expenditures.

Property Types and Assessment

• Tax Exempt: Status indicating a person or organization not obligated to pay taxes.
• Real Property: Tangible land and buildings subject to property taxation.
• Personal Property: Movable possessions, including items like jewelry and furniture.
• Tax Assessor: Official responsible for determining property values for taxation purposes.

Test your knowledge of key economic terms in Chapter 14 with these flashcards. Each card provides a term along with its definition, covering essential concepts such as taxes, revenue, and taxable income. Perfect for students looking to reinforce their understanding of economic principles.