Chapter 2: Policy Standards for a Good Tax
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
|
|
||||
|---|---|---|---|---|---|
| tax policy | a government’s attitude, objectives, and actions with respect to its tax system
🗑
|
||||
| sufficiency | the first standard for a good tax. a tax should generate enough revenue to pay for the public goods and services provided by the government levying the tax
🗑
|
||||
| static forecast | a projection of revenue gain or loss resulting from a tax rate change that assumes that the change will have no effect on the tax base
🗑
|
||||
| dynamic forecasts | a projection of revenue gain or loss resulting from a tax rate change that assumes that the change will affect the tax base
🗑
|
||||
| income effect | a behavioral response to an income tax rate increase. Taxpayers engage in more income-producing activities to maintain their level of disposable income.
🗑
|
||||
| substitution effect | a behavioral response to an income tax rate increase. Taxpayers engage in fewer income-producing activities and more non–income-producing activities
🗑
|
||||
| supply-side economic theory | a decrease in the highest income tax rates should stimulate economic growth and ultimately result in an increase in government revenues
🗑
|
||||
| convenience | the second standard for a good tax; a tax should be convenient for the government to administer and for people to pay
🗑
|
||||
| efficiency | classical economic theory holds that an efficient tax is neutral and has no effect on economic behavior. In contrast, Keynesian theory holds that an efficient tax is a fiscal policy tool by which the government can affect economic behavior
🗑
|
||||
| negative externalities | an undesirable by-product of the free enterprise system
🗑
|
||||
| tax preferences | in the general context, provisions included in the federal tax law as incentives to encourage certain behaviors or as subsidies for certain activities; in AMT context, specific items added to regular taxable income in the computation of AMTI
🗑
|
||||
| Tax Expenditures Budget | part of the federal budget that quantifies the annual revenue loss attributable to each major tax preference
🗑
|
||||
| ability to pay | economic resources under a person’s control from which he or she can pay tax
🗑
|
||||
| horizontal equity | one aspect of the fourth standard of a good tax: A tax is fair if persons with the same ability to pay (as measured by the tax base) owe the same tax
🗑
|
||||
| vertical equity | one aspect of the fourth standard of a good tax: a tax is fair if persons with a greater ability to pay (as measured by the tax base) owe more tax than persons with a lesser ability to pay
🗑
|
||||
| regressive rate structure | a graduated rate structure with rates that decrease as the base increases
🗑
|
||||
| proportionate rate structure | a rate structure with a single, or flat, rate
🗑
|
||||
| declining marginal utility of income | the theory that the financial importance associated with each dollar of income diminishes as the total income increases
🗑
|
||||
| progressive rate structure | a graduated rate structure with rates that increase as the base increases
🗑
|
||||
| marginal rate | the tax rate that applies to the next dollar of taxable income
🗑
|
||||
| average rate | the tax rate determined by dividing the total tax liability by the total tax base
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
ryanriggs18
Popular Accounting sets