| A | B |
|---|
| Circular flow of income model | “A simplified depiction of how money flows through a market economy; shows money going back and forth between consumers and businesses” |
| Corporation | “A form of business ownership that is owned by stockholders who have purchased units or shares of the company; an “artificial being |
| Deduction | A tax write-off that reduces the gross amount of an individual’s income |
| Distributive share | Each business owner’s portion of a business’s profits and losses |
| Dividend | A sum of money paid to an investor or stockholder as earnings on an investment |
| Excise tax | An indirect tax charged on specific goods |
| Expenditures | “The monies that a business or government spends; also called spending or expenses” |
| Exports | “Goods and services sold by businesses and industries in one country to individuals |
| Federal Insurance Contributions Act (FICA) | “Legislation authorizing a U.S. payroll tax paid into equally by employees and employers to fund federal programs for retirees |
| Flat tax | “A tax under which the same rate applies to everyone (e.g. |
| Gross wages | The amount of money an employee makes before taxes |
| Imports | Goods or services purchased from other countries |
| Income tax | A portion of an individual’s or business’s earnings owed to the government |
| Incorporate | To become a legal corporation |
| Internal Revenue Service (IRS) | A United States federal agency that collects taxes and enforces tax law |
| Limited liability company (LLC) | “A hybrid form of business ownership in which members of a business experience limited liability and taxation; the business entity has a limited life span” |
| Loophole | “A technicality (e.g. a tax loophole that allows an individual or business to pay less than it really owes)” |
| Market economy | “An economic system in which the questions of what |
| Medicaid | Low-income health-care coverage in the United States |
| Medicare | Government-supplied health care for seniors in the United States |
| National debt | The total amount of money that the federal government has borrowed |
| Partnership | A form of business ownership in which the business is owned by two or more persons |
| Pass-through entity | A business in which profits and losses pass through to the business owners; also called a flow-through entity |
| Payroll tax | A tax on employment |
| Private enterprise | “An economic system in which individuals and groups |
| Profit | Income left once all expenses are paid |
| Property tax | A tax based on a percentage of the value of the property owned; most often applies to real estate |
| Sales tax | A tax collected from consumers at the point of purchase; usually a percentage of the total sale |
| Self-employment tax | “Money that a self-employed person must pay to the federal government to fund Medicare and Social Security; the equivalent of a business’s payroll tax” |
| Shareholder | Anyone who owns stock in a corporation; also known as a stockholder |
| Social Security | “Federal programs for retirees |
| Sole proprietorship | A business owned by one person who receives all the profits from the business and takes all the risks |
| Subsidy | Financial support extended by the government with the goal of creating an economic or social benefit |
| Tax break | An indirect government subsidy given in the form of reduced taxes; its goal is often to stimulate business or create jobs |
| Tax code | A document that details the rules for individuals and businesses to follow when paying taxes to the government |
| Tax revenue | The income the government gains by levying taxes on individuals and businesses |
| Taxable income | The portion of an individual’s or business’s earnings that is subject to taxation |
| Taxes | Monies that individuals or businesses must pay to the government |
| Trust fund | Money that is set aside for a specific use or purpose |
| Workers’ compensation | Insurance purchased by employers to provide benefits to employees who are injured on the job |
