Fiscal Policy: Taxes Flashcards
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Questions and Answers

What is a progressive tax?

  • A tax in which wage earners with lower incomes are taxed at a higher percentage rate than earners with higher incomes
  • A tax in which wage earners with higher incomes are taxed at a higher percentage rate than earners with lower incomes (correct)
  • A flat tax applied uniformly regardless of income
  • A tax that only applies to capital gains

    • A proportional tax taxes wage earners with lower incomes at a higher percentage rate than those with higher incomes.

    False

    What is society?

    A group of individuals, usually within a community, who share traditions, interests, and establishments.

    What is a tax?

    <p>An amount taken from income or added to purchases by various levels of government.</p> Signup and view all the answers

    Expansionary taxation policies encourage growth and are always appropriate to implement.

    <p>False</p> Signup and view all the answers

    According to the chart, how are the citizens being taxed?

    <p>Proportionally.</p> Signup and view all the answers

    Why do governments collect taxes?

    <p>To ensure that citizens contribute to meeting society's needs.</p> Signup and view all the answers

    What type of tax is a sales tax?

    <p>Indirect tax.</p> Signup and view all the answers

    How can contractionary policies hamper economic growth?

    <p>They slow demand.</p> Signup and view all the answers

    What are examples of programs or projects most likely funded by taxes in the United States?

    <p>Constructing a highway, maintaining state parks, collecting garbage.</p> Signup and view all the answers

    Under an expansionary taxation policy, how does the government try to stimulate economic growth?

    <p>By increasing spending.</p> Signup and view all the answers

    How are progressive taxes and regressive taxes similar?

    <p>Both are considered flat taxes.</p> Signup and view all the answers

    What is most likely the US government's aim in taxing imported goods?

    <p>To protect domestic businesses.</p> Signup and view all the answers

    How can expansionary policies facilitate economic growth?

    <p>They increase disposable income.</p> Signup and view all the answers

    How would you best describe income tax?

    <p>Direct tax.</p> Signup and view all the answers

    What does the graph indicate about government spending?

    <p>The government almost always spends more than it collects.</p> Signup and view all the answers

    Under a contractionary taxation policy, how does the government try to improve its finances?

    <p>By increasing taxes.</p> Signup and view all the answers

    A(n) ________ policy is employed when the government chooses to run a larger deficit.

    <p>expansionary</p> Signup and view all the answers

    How are property taxes usually determined?

    <p>Based on the value of the property.</p> Signup and view all the answers

    How is an excise tax different from a sales tax?

    <p>An excise tax applies to specific products.</p> Signup and view all the answers

    Study Notes

    Tax Types and Definitions

    • Progressive Tax: Higher income earners pay a larger percentage of their income in taxes compared to lower income earners.
    • Proportional Tax: Lower income earners incur a higher percentage tax rate compared to higher earners, often considered an uncommon structure.
    • Excise Tax: A tax applied to specific products, distinct from general sales tax which applies to all purchases.

    Society and Taxation

    • Society: Comprises individuals sharing common traditions and interests within a community.
    • Tax: A government-imposed fee on income or purchases, allocated for public services and infrastructure.

    Government Strategies

    • Expansionary Taxation Policies: Aimed at stimulating economic growth by increasing government spending; these policies ensure continuity of necessary services for citizens.
    • Contractionary Taxation Policies: Intended to improve government finances by increasing taxes; risks slowing demand and hindering economic growth.

    Economic Impact of Taxation

    • Importance of Taxation: Governments collect taxes to meet societal needs and fund essential services, such as road construction and maintenance of public parks.
    • Disposable Income: Expansionary policies increase disposable income, thereby facilitating economic growth.

    Tax Structure and Analysis

    • Direct Tax: Income tax is categorized as a direct tax, collected directly from individuals’ earnings.
    • Government Spending: Typically, government expenditure exceeds tax collection, implying reliance on deficit spending for financing.

    Protective Measures and Goals

    • Tariffs on Imported Goods: Taxing imports primarily aims to protect domestic businesses from foreign competition.
    • Property Taxes: Determined based on a property's assessed value, forming a crucial part of local government funding.

    Summary of Characteristics

    • Flat Taxes: Progressive and regressive taxes are both labeled as flat taxes, although their impacts differ based on income levels.
    • Sales Tax: Classified as an indirect tax, affecting the final price paid by consumers without directly impacting income.

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    Description

    Test your knowledge on key terms related to fiscal policy and taxation with our flashcards. Learn about different types of taxes, including progressive and proportional tax systems, and understand their implications for society. Ideal for students studying economics or taxation.

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