Economics 012 1-25-2008

Economics 012 1-25-2008 - Fiscal federalism: higher...

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Economics 012—1/25/2008 - Chapter 18: Taxation - Levels and Types of Taxation o Federal direct- income/on people o State/local indirect-goods/activities o Progressive: average tax rate goes up as income goes up o Proportional: same tax rate no matter what o Regressive: average tax rate goes down as income goes up - Federal Tax System o Federal Personal Income Tax o Corporate Income Tax o Excise Tax: sales tax; tax on a good/service to discourage consumption o Payroll and Social Security Taxes - State and local tax system o Sales tax o Property tax o
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Unformatted text preview: Fiscal federalism: higher governments give grants to lower level of government-Concept of Equity in Taxation o Horizontal equity: people with the same level of income should pay the same tax rate o Vertical equity: people with different levels of income should pay different tax rates Ability to pay o Benefits principal: if you get benefits you should pay taxes on those services-Efficiency o Burden of a tax: amount of money to give to somebody so he can be just as well off as without the tax...
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Economics 012 1-25-2008 - Fiscal federalism: higher...

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