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gabo
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Goverment Expenditures
Federal, state and local goverment outlays for goods and services, including transfer payments.
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Financing Goverment Budget
- Income taxes
- Social insurance taxes
- Corporate Income Taxes
- Excise taxes
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Benefit-received priciple
The concept that those whose benefit from goverment expenditures should pay the taxes that finance their benefits.
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Ability to pay principle
The concept that those who have the higher income can afford to pay greater proportion at their income in taxes, regardless of benefits received.
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Progressive tax
A tax that charges a higher % of income as income rises.
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Regresive tax
A tax that charges a lower % of income as income rises.
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Proportional tax
A tax that charges the same % of income regardless of the size of income. Also called the flat-tax rate.
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Public choice theory
The analysis of the goverment's decision making process for allocating resources.
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Benefit cost analysis
The comparasion of the aditioanl reward and cost of an economic alternative.
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Special interes group effect
Occurs when the goverment approves programs that benefits only a small group within society, but society as a whole pays the cost.
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Rational Ignorance
The voter's choice to remain uninformed because the marginal cost of obtaining information is higher than the marginal benefit from knowing it.
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