Economics Chapter 14 Flashcards

Questions and Answers

What is a tax?

A fine imposed for breaking the law

A voluntary fee paid for services

An optional contribution to a charity

A required payment to a local, state or national government (correct)

What is revenue?

Income received by a government from taxes and non-tax sources

What is tax base?

Income, property, good or service that is subject to a tax

What does individual income tax refer to?

A tax on a person's income Signup and view all the answers

What is sales tax?

A tax on the dollar value of a good or service being sold Signup and view all the answers

What is property tax?

A tax on the value of a property Signup and view all the answers

What is corporate income tax?

A tax on the value of a company's profits Signup and view all the answers

What is a proportional tax?

A tax for which the percentage of income paid in taxes remains the same for all income levels Signup and view all the answers

What characterizes a progressive tax?

A tax for which the percentage of income paid in taxes increases as income increases Signup and view all the answers

What is a regressive tax?

A tax for which the percentage of income paid in taxes decreases as income increases Signup and view all the answers

What does incidence of a tax refer to?

A final burden of a tax Signup and view all the answers

What is withholding?

Taking tax payments out of an employer's pay before he or she receives it Signup and view all the answers

What is a tax return?

Form used to file income taxes Signup and view all the answers

What is taxable income?

Income on which tax must be paid; total income minus exemptions and deductions Signup and view all the answers

What is a personal exemption?

Set amount that you subtract from your gross income for yourself, your spouse, and any dependents Signup and view all the answers

What are deductions?

Variable amounts that you can subtract or deduct from your gross income Signup and view all the answers

What does FICA stand for?

Taxes that fund Social Security and Medicare Signup and view all the answers

What is Social Security?

Old Age, Survivors and disability insurance (OASDI) Signup and view all the answers

What is Medicare?

A national health insurance program that helps pay for health care for people over age 65 or with certain disabilities Signup and view all the answers

What is an estate tax?

A tax on the estate, or total value of the money and property, of a person who has died Signup and view all the answers

What is a gift tax?

A tax on money or property that one living person gives to another Signup and view all the answers

What is a tariff?

A tax on imported goods Signup and view all the answers

What is a tax incentive?

The use of taxation to encourage or discourage certain behavior Signup and view all the answers

What is mandatory spending?

Spending on certain programs that is mandated, or required by existing law Signup and view all the answers

What is discretionary spending?

Spending category about which government planners can make choices Signup and view all the answers

What does entitlement mean in economics?

Social welfare program that people are 'entitled to' if they meet certain requirements Signup and view all the answers

What is Medicaid?

Entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes Signup and view all the answers

What is an operating budget?

Budget for day-to-day expenses Signup and view all the answers

What is a capital budget?

Budget for major capital, or investment expenditures Signup and view all the answers

What is a balanced budget?

Budget in which revenues are equal to spending Signup and view all the answers

What does it mean for an entity to be tax exempt?

Not subject to taxes Signup and view all the answers

What is real property?

Physical property such as land and buildings Signup and view all the answers

What is personal property?

Possessions such as jewelry, furniture, and boats Signup and view all the answers

What is a tax assessor?

An official who determines the value of property Signup and view all the answers

Study Notes

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.

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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.