Ch 25 Government Finances
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Where does the government get their money from?
What are the taxes that governemnt raise money through?
- income tax
- sale tax
- property tax
What are taxes on your income?
What are taxes on the good and services you buy?
What are taxes on the property you own?
What is an example of taxes that are used to change people behavior?
What is a SIN TAX and give example?
is a tax design to reduce the consumption of an undersible product Ex. coke
When are taxes fair?
- everyone pays the same ammount
- ritch pay higher % then poor
- everyone pays equal %
What are the 2 pronciples of Taxation
- How do you select the persons or groups on whom the taxes will be imposed, or say how much each will pay?
- Who pays what is very important!
Who should have to pay taxes?
What is the benefit principle?
those who BENIFIT from the government services should be the ones to pay for them
What are the 2 limitations of the benefit principle?
- those who benefit are poor
- benefits are hard to measure
What is the ability-to-pay principle?
people should be taxed according to their ability to pay
Who should have to pay the taxes based on the ability-to-pay principle?
What are the three general types of taxes?
What is a proportional tax?
a tax that imposes the SAME % rate taxation on everyone, regardless of their income.
What is a progressive tax?
a tax that imposes a higher % rate on people with high incomes and lower % rate on people with low incomes
What is a regressive tax?
- a tax that causes a higher % of income to be taken form the poor and a lower % of income to be taken from the rich
- THE POOR PAY MORE!
What amendment gave us the income tax?
- when you are 16 you make income
What is the FICA tax?
the federal government collects this tax from both the employers and employees for social security and medicare
What is corporate income tax?
a tax a corporation pays on its profits
What is an excise tax?
a tax on certain goods
What is an estate tax?
a tax the government collects on the transfer of property when a person dies; more than $50,000
What is a customs duty tax?
a tax on imports
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