Micro Chapter 7 ; TAXES
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19 terms
Terms | Definitions |
|---|---|
 excise tax | tax on sales of a good or service |
| incidence` | tax is a measure of who really pays it |
| When does the burden of a excise tax falls on the consumers | when the price of elasticity of demand is low and the price of elasticity is high |
| the price elasticity of demand for gas is? | low |
| when does the burden of a excise tax fall on the producers? | when the price elasticity of demand is high and the price elasticity of supply is low |
| tax rate | amount of tax people are required to pay per unit of whatever is being taxed |
| An excise tax drives what and in between what? | wedge. equal to the amount of the tax between the price received by producers an the price paid by consumers |
| administrative costs | the resources used by government to collect tax |
| what is the total inefficiency caused by a tax? | sum of deadweight loss and administrative costs |
| benefits principal of tax fairness | those who befit from public spending bear the burden of the tax that pays for that spending |
| lump sum tax | tax that is the same for everyone regardless of any actions people take |
| income tax | tax that depends on a persons income from wages and investments |
| payroll tax | tax that depends on earnings an employer pays to an employee |
| sales tax | tax that depends on value of good |
| profits tax | tax that depends on firm's profits |
| wealth tax | tax that depends on someones wealth |
| progressive tax | takes a larger share of income of high-income taxpayers than low payers |
| regressive tax | takes a smaller share of the income of high income taxpayers than low income taxpayer |
| marginal tax rate | % of an increase in income that is taxed |
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