Lecture 8 Taxation Note Quiz
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Economists view the government as a type of _____.
Money goes into the government in the form of ____ and _____ go out.
Just as business is concerned with ____, ____, and ____, so is the government.
income; profit; accountability
What four ways does the government get money?
- 1. Income tax
- 2. Social Security tax
- 3. Excise tax
- 4. Other misc. taxes
What percent of government earnings is both individual and corporate income tax? What affects this amount?
What percent of government earnings is based upon Social Security tax? What affects this amount?
What is excise tax? What percent of government earnings comes from this tax?
- Taxes on alcohol, tobacco, transportation (gas)
What is the greatest amount of income for the government to operate from? What percent?
What three countries lead the west in taxes? What do these taxes pay for?
- Denmark, Norway, and Sweden
- Education, medicine, etc.
What country does not collect taxes? Why?
- Muslim nations
- Against the Koran
What two countries are increasing their taxes? Why?
- China and Japan
- Providing more government services
What five places does our money go?
- 1. Transfer Payments
- 2. National Defense
- 3. Interests on the Debt
- 4. Education Assistance
- 5. Foreign Aid
What percent of our money goes to transfer payments? What is included in this?
- Social Security - 22%
- Medicare - 10%
- Income Security - 15%
- Health Assistance - 7.5%
- Veterans Benefits - 2.5%
What percent of our money goes to National Defense? What is included in this?
- Armed services and business contractors or provide weapons and supplies
What percent of our money goes to Interest on the Debt? Who collects this debt?
What percent of our money goes to Education Assistance?
What percent of our money goes to Foreign Aid? What countries receive the most of this money?
- Isreal, Egypt, and other Middle East countries
What three taxes go to support state and local budgets?
- 1. State sales tax
- 2. State income tax
- 3. Property tax
What three things do state and local budgets often deal with?
- 1. education
- 2. transportation
- 3. public welfare assistance
What four reasons do governments collect taxes?
- 1. pay for cost of government (transfer pay)
- 2. protect selected industries (tariffs)
- 3. discourage certain activities (alcohol, cigarettes)
- 4. encourage others through tax breaks (business entrepreneurship)
What is the benefits-received principle?
those who benefit the most should pay the most (hurts the poor)
What is the ability-to-pay principle?
tax in proportion to who is best able to pay taxes (hurts the rich)
What are the three types of taxes? Explain each
- 1. Proportional tax: everyone taxed the same rate (flat tax)
- 2. Progressive tax: rich pay greater than the poor
- 3. Regressive tax: poor pay more than the rich (sales tax is considered regressive)
What is the democrats' view of taxes today? Republicans? What is the reality?
- Democrats: tax money goes to support important programs
- Republicans: lower taxes and cut services
- Reality: Americans want a lot of services and lower taxes - the result is federal debt and deficit
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