Chapter 18 tax system

Chapter 18 tax system - indirect taxes are taxes levied on...

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Chapter 18 taxation and resource allocation the level and types of taxation the snares of GDP taken in taxes by the federal, state, and local governments where approximately constant for more than thirty years, but the federal shere has dropped sharply in this decade. progressive, proportional, and regressive taxes a progressive tax is one in which the average tax rate paid by an individual rises as income rises. a proportional tax is one which the average tax rate is the same at all income levels a regressive tax is one in which the average tax rate falls as income rises. the average tax rate is the fraction of each additional dollar of income that is paid in taxes. the marginal tax rate is the fraction of each additional dollar of income that is paid in taxes. Direct versus indirect taxes direct taxes are taxes levied directly on people.
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Unformatted text preview: indirect taxes are taxes levied on specific economic activities the federal tax system the federal personal income tax a tax loophole is a special provision on the tax code that reduces taxation below normal rates (perhaps to zero) if certain conditions are met. tax exempt status of municipal bond interest a particular source of income is tax exempt if income from that source is not taxable. tax benefits for homeowners a tax deduction is a sum of money that may be subtracted before the taxpayer computes his or her taxable income every tax loophole encourages particular patterns of behavior and favors particular types of people. furthermore, because most loopholes mainly benefit the rich, they erode the progressivity of the income tax. the payroll tax typically social security, medicare, etc....
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