Understanding Tax Structures: Regressive, Proportional, and Progressive Taxes - Prof. 2017, Diapositivas de Economía de Mercado

¡Descarga Understanding Tax Structures: Regressive, Proportional, and Progressive Taxes - Prof. 2017 y más Diapositivas en PDF de Economía de Mercado solo en Docsity! TAX STRUCTURES Types: Regressive tax: A regressive tax takes a larger percentage of income from people with low incomes than from people with high incomes. With this tax structure the percentage of income paid in taxes decreases as income increase. Proportional tax: A proportional tax takes the same percentage of income from all taxpayers regardless of income level, the rate of the is the same for everyone no mattering their earnings (it applies the same tax rate across low, middle and high income taxpayers). Progressive tax: A progressive places a higher rate of taxation on high income earners than on low income earners. The tax rate increases as the person’s income increases too. Mandatory spending: Mandatory spending is the one mandated by law. It refers to a budgeted amount of money that must be set aside for certain programs or initiatives as set forth by the government. Most of this spending is in the form of entitlements (social welfare programs with specific requirements). In this category are included Social Security and Medicare, which they both provide payments to anyone who is eligible based on age or disability. Other programs are the Food Stamp program which provides funds for low-income people to purchase food or Veterans' benefits which include health care coverage and disability payments for service-related illness or injury. Discretionary spending: Is the spending that the government must authorize each year. The programs covered by discretionary spending fall into several different categories which include: interstate highway system and transportation programs; natural resources and the environment (conservation programs, pollution clean-up, national parks...); education; science, space, technology and other research programs; justice administration including enforcement agencies (FBI, the federal court system...). The largest one is National defense which includes the salaries of military personnel, weapons, construction and maintenance of military basis... RESOURCES: Chapter Fourteen http://www.investopedia.com/terms/p/proportionaltax.asp http://www.investopedia.com/terms/r/regressivetax.asp http://www. investopedia.com/terms/p/progressivetax.asp http://www.businessdictionary.com/definition/mandatory- spending.html