econ.- taxes (notes)

taxes: required payment to local/state/national government

revenue: income received by government from taxes & non-tax sources

tax base: income/property/good/service subject to a tax

3 tax structures: 

1. proportional: constant % of income taken in tax as income rises
2. progrressive: larger % of income taken in tax as income rises
3. regressive: smallaer % of income taken in tax as income rises

individual income tax: tax on person's earnings

corporate income tax: tax on value of a company's profits

FICA: Federal Insurance Contributions Act
tax funds:

• social security: old age, survivors, disability insurance
• medicare: national health insurance program helps pay for healthcare for people 65+ or w certain disabilities 

entitlement program: social welfare program that people are "entitled to" if meet requirements

fiscal policy: use of government spending & revenue collection to influence economy

balanced budget: revenues = spending

budget surplus: situation in which the government takes in more than it spends

budget deficit: situation in which the government spends more than it takes in

deficit: amount of money government borrows from 1 budget
vs.
debt: sum of all government borrowing up to that time

constitutional powers that give federal government the power to tax:
expressed- (article 1, section 8, clause 1) basis for federal tax
limits to taxing: 

• taxation clause- can't bring money that goes to individual interests
• federal taxes same in every state
• can't tax church bc 1st amendment
• can't tax exports

characteristics of a good tax:

• simplicity: easily understood
• efficiency: government administrators collect taxes w/o spending too much time of money & taxPAYERS shouldn't spend too much time or money 
• certainty: clear to taxpayer when it's due, how much, & how to pay
• equity: tax system= fair. no one bears too much/little burden

why federal government withholds taxes from each paycheck: how much you will owe in federal income taxes

how they determine over/underpaid:

• tax return: form used to file income taxes
• taxable income: income on which tax must be paid = total income minus exemptions & deductions
• personal exemptions: set amount subtracted from gross income for you/spouse/etc.
• deductions: variable amount can subtract from gross income

taxes affect our behavior as consumers:
tax incentive: use taxation to encourage/discourage certain behaviors
sin taxes: discourage from tobacco/alcohol/etc.

spending:
mandatory:

• spending on certain programs that are mandated/requited by existing laws
• use for interest payments on national debt

discretionary:

• spending category about which government planners can make choices
• defense
• education

the way state taxes are spent:

• education: every state has at least 1 public state university, supports tech., colleges, community
• public safety: police force enforces traffic laws, crime labs
• highways & transportation: resurfacing roads, repairing bridges, waterways, airports
• public welfare: hospitals, clinics, inspect water supplies & pollution
• arts & recreation: state forests/parks, nature reserves, museums, art & music programs
• administration: state government executive branch, legislature, court system, pay state workers, maintenance crews in parks, government & state court judges 
• collect revenue: limits on state tax: constitution limits, can't tax imports/exports, federal property, nonprofit organizations, etc.
• sales taxes: tax on goods/services, sin taxes, tax ranges depending on state
• state income taxes: type of tax varies by state
• corporate income tax: from companies, type of tax varies
• other state taxes: licensing fees, transfer taxes (documents, certificates, transgerred & recorded), severance taxes (companies take resources from state), property (real estate, personal property)

local government: responsible for funding/running:

• public school system
• law enforcement
• public facilities
• parks
• public health
• transportation
• elections
• record keeping
• social services

funding: property taxes, sales, excise, income taxes