Tax base - The maximum amount of earnings on which a tax is

calculated
Sales tax
Individual income tax - a tax on a person's earnings
House tax
Sales tax - A tax on a sale of merchandise or services
Tax on a toy
Property tax - a capital tax on property imposed by municipalities
Tax on your property like a house
Corporate income tax - a tax on the value of a company's profits
Federal tax rates
Proportional tax - A tax in which the average tax rate is the same at all
income levels.
Sales tax
Progressive tax - A tax for which the percentage of income paid in
taxes increases as income increases
Federal income tax in America
Regressive tax - A tax for which the percentage of income paid in taxes
decreases as income increases
If a person has a $10 of income and must pay $1 on a package of
cigarettes
Tax burden - falls more heavily on the side of the market that is less
elastic
Is shown between buyers and sellers
Withholding - Taking tax payments out of an employee's pay before he
or she receives it
Taking money out of your target paycheck
Tax return - an annual report to the IRS summarizing total income,
deductions, and the taxes withheld by employers
On April 15 you had to pay taxes and you get some money back
Taxable income - income on which tax must be paid; total income
minus exemptions and deductions
Your original income before the deduction of taxes

Personal exemption - set amount that you subtract from your gross
income for yourself, your spouse, and any dependents
Subtracted money from your gross income
Deductions - Amounts subtracted from your gross pay.
Subtracts from your gross pay
FICA - Amount of social security tax withheld from a paycheck.
Social security
Social security - (FDR) 1935, guaranteed retirement payments for
enrolled workers beginning at age 65; set up federal-state system of
unemployment insurance and care for dependent mothers and
children, the handicapped, and public health
A number that gets you into your bank account
Medicare - A federal program of health insurance for persons 65 years
of age and older
Helps old people have cheaper health insurance
Estate tax - A tax on the estate, or total value of the money and
property, of a person who has died
Your dead grandpas house tax
Gift tax - a tax imposed on transfers of property by gift during the
lifetime of the giver
A tax on a lifetime gift
Import tax - a tax on imported goods
Tax on imported tea
Tax incentive - the use of taxation to encourage or discourage certain
behavior
Using tax as a bribery
Mandatory spending - Required got spending by permanent laws
Food stamps
Entitlement spending - Spending determined by the number of
qualified recipients and their legally determined need is called
Medicaid
Federal aid to state governments - Categorical Grants

Social security

Operating budget - Budget for day-to-day expenses

Spending budgets
Balanced budget - a budget is balanced when current expenditures are
equal to receipts
A balanced weekly budget
Tax exempt - not subject to taxes
Subject taxes
Real property - Interests, benefits, and rights associated with real
estate ownership
Benefits on owning a house
Personal property - All property not classified as real property
A house
Tax assessor - The person who assigns value to property for tax
purposes
A realtor
Fiscal policy - A government policy for dealing with the budget
(especially with taxation and borrowing)
Government needing to deal with a the countries borrowing
budget
Federal budget - a plan for the federal government's revenues and
spending for the coming year
Federal government budget
Fiscal year - An accounting period of 12 months.
Year where you have to account
Office of management and budget - helps the president prepare the
annual federal budget
Meeting that helps president prepare a federal budget
Congressional budget office - Advises Congress on the probable
consequences of its decisions, forecasts revenues, and is a
counterweight to the president's Office of Management and Budget.
Advising congress for its decisions

Appropriations bill - An act of Congress that actually funds programs

within limits established by authorization bills. Appropriations usually
cover one year.
Food stamps
Expansionary policies - fiscal policies, like higher spending and tax
cuts, that encourage economic growth
Fiscal policies
Contraction policies - Low spending high taxes
Low spending and than you have to pay high taxes
Classical economics - the idea that free markets can regulate
themselves
Claires jewelry store
Productive capacity - the maximum output that an economy could
produce without big increases in inflation
Maximum output
Demand side economics - the idea that government spending and tax
cuts help an economy by raising demand
Raising demand
Supply side economics - An economic philosophy that holds the sharply
cutting taxes will increase the incentive people have to work, save, and
invest. Greater investments will lead to more jobs, a more productive
economy, and more tax revenues for the government.
More jobs
Keynesian economics - Theory based on the principles of John Maynard
Keynes, stating that government spending should increase during
business slumps and be curbed during booms.
Spending should increase during business slumps
Multiplier effect - An effect in economics in which an increase in
spending produces an increase in national income and consumption
greater than the initial amount spent.
National income
Automatic stabilizer - Changes in fiscal policy that stimulate aggregate
demand when the economy goes into a recession without policymakers
having to take any deliberate action
Policymakers taking action

Council of economic advisers - a three-member body appointed by the

president to advise the president on economic policy
Joe Biden
Lifer curve - Attempts to explain how consumers react to changes in
income tax rate
Consumers reaction
Budget surplus - An excess of tax revenue over government spending
Tax revenue
Treasury bills - U.S. government obligations generally issued with 4, 13,
and 26-week maturities.
Government obligations
Treasury notes - certificates issued by the US Treasury in exchange for
minimum amounts of $1,000 and maturing in 1 to 10 years
Notes on bills
Treasury bonds - US government obligations with original maturities of
more than 10 years. They are issued in $1000 denominations and pay
interest semiannually
Bonds
National debt - The sum of government deficits over time.
Our nations debt