Chapter 9 Vocabulary
Terms
►Sin
tax
►A high tax designed to
raise revenue and reduce
consumption of a socially
undesirable product such
as liquor or tobacco.
► The
highest court in Texas has upheld a special "sin
tax" imposed on "sexually oriented" businesses, which
the state openly says it hopes will discourage
"secondary behaviors" allegedly associated with those
going to watch unclothed dancers.
► The Texas Supreme Court on Friday said the $5-perpatron fee was constitutional and did not violate the
free speech rights of club owners.
► "The fee in this case is clearly directed not at
expression in nude dancing but at the secondary
effects of nude dancing when alcohol is being
consumed," said Justice Nathan Hecht. Such "social
ills" were identified by the state as rape, sexual
assault, prostitution and disorderly conduct.
►Tax
loopholes
►Exceptions or oversights in the
tax law that allow some people
and business to avoid paying
taxes.
►Fairness issue
►Most people oppose b/c of the
fairness issue.
► Play
Video – Reagan Called for an End
►Sales
tax
►A general tax levied on
most consumer purchases.
►Paid at the time of
purchase.
►Everyone who buys the
product is taxed.
►Individual
income tax
►Tax on people’s
earnings.
►
►Benefit
principle of
taxation
►Those who benefit from
government goods and
services should pay in
proportion to the amount
of benefits they receive.
►You
pay a tax on gas that is
built in to the price.
►People who drive more than
others pay more gas taxes.
►Therefore, some people pay
for more of the upkeep of
our nation’s highways.
►Ability
to pay principal of taxation
►The belief that people should be
taxed according to their ability to
pay, regardless of the benefits
they receive.
►Individual income tax, which
requires individuals with higher
incomes to pay more than those
with lower incomes.
► Play
video – Future President
►Proportional
tax
►Imposes the same
percentage rate of
taxation on everyone,
regardless of income.
►Progressive
tax
►Tax that imposes a higher
percentage rate of taxation
on persons with higher
income.
►$1,000 on $10,000
►$4,000 on $20,000
►$30,000 on $100,000
► Play
video – Tax the Rich Feed the Poor +
Feed the Poor
►Regressive
tax
►Tax imposes a higher
percentage rate of
taxation on low
incomes than on high
incomes.
► People
in lower-income brackets are
statistically more likely to become addicted
to tobacco. This is due to many factors,
from lack of overall education to cigarette
marketing strategies. When these lowerincome folks not only pay the cost of their
cigarettes, but also bear the excessive
taxation associated with them, the final cost
can take a substantial percentage of their
income. People who earn higher wages pay
a lower percentage of their overall income.
This is the nature of the regressive tax, and
it is not fair.
►Payroll
withholding system
►A system that requires an
employer to automatically
deduct income taxes from
an employee’s paycheck and
send it directly to the
government.
►Internal
Revenue
service (IRS)
►Branch of the U.S.
Treasury Department
in charge of collecting
taxes.
► Play
Video – What Happens if You don’t File
►Tax
return
►An annual report to the
IRS summarizing total
income, deductions, and
taxes withheld by
employers.
►
Play Tax Video – How to Fill Out W-4
►FICA
►Federal
Insurance
Contributions Act tax
levied on both employers
and employees to pay for
Social Security and
medicare.
► The
country's benefit programs for the
elderly – Medicare and Social Security
– will be exhausted sooner than
thought due to the economic
downturn, the Social Security and
Medicare Boards of Trustees said
today.
► Medicare's Hospital Insurance Fund is
projected to exhaust its funds in 2024,
five years sooner than last year's
estimate, and Social Security will be
exhausted in 2036, a year earlier than
previously thought, the trustees
announced.
►Medicare
►Federal
health-care
program available to
all senior citizens,
regardless of
income.
►Pay
roll taxes
►Taxes (FICA and
Medicare)
deducted from
your paycheck.
►Excise
tax
►Tax on the manufacture or
sale of selected items, such as
gasoline and liquor.
►Regressive because lowincome families spend larger
portions of their incomes on
snuff, liquor, legal betting.
►Estate
tax
►Tax the
government levies
on the transfer of
property when a
person dies.
► Play
video – Whoopi Goldberg
►Gift
tax
►Tax on donations of money or
wealth and is paid by the
person who makes the gift.
►Used to make sure wealthy
people do not try to avoid
taxes by giving away their
estates before their deaths.
►Property
►A
tax
tax on
possessions such
as real estate.