| A | B |
|---|
| Internal Revenue Service | Govt. organization responsible for administering and collecting taxes |
| sin tax | an additional charge placed on goods and services meant to change consumption and human behavior. (ex. Alcohol taxes or cigarette taxes) |
| Resource Allocation | Taxes placed on goods cause factors of production to shift to other markets or facilities |
| Behavior adjustment | An impact of tazes that causes how humans act to change. |
| Incidence of a Tax | final burder of a tax; ultimately, "who pays?" |
| Equity | Criteria of a tax that focuses on how "fair" the tax is. |
| Simplicity | Criteria of a tax that looks at how "easy the tax is to understand" |
| Efficiency | Criteria of a tax that looks at how "easy it is to administer and collect taxes" |
| Individual Income Tax | tax on peoples earnings |
| Sales Tax | Tax on consumer goods purchased |
| Benefit Principle of Taxation | Those that benefit from the taxes should pay more. |
| Ability to Pay Principle | people should be taxed on their ability to pay |
| Proportional Tax | Imposes the same percentage rate on everyone. |
| Average Tax Rate | Total taxable income divided by total income |
| Progressive Tax | imposes a HIGHER percentage on those that can afford it |
| Marginal Tax Rate | Tax rate that applies to the next dollar of income |
| Regressive Tax | Imposes a higher rate of taxation on lower incomes. |
