tax equity  The idea that a tax system should be fair. Although people agree with tax equity in principle, they often disagree on how to achieve it.

tax incidence  The allocation of the burden of a tax between consumers and producers. Tax incidence is said to fall on the group that bears the burden of tax, no matter from whom the tax is collected.

deadweight loss  A loss of productivity or economic well-being for which there is no corresponding gain. A tax causes deadweight loss when the costs to taxpayers of paying the tax exceed the revenues gained by the government.

tax rate  The percentage that is levied on the value of whatever is being taxed, such as income or property.

proportional tax  A tax that takes the same share of income at all income levels. A proportional income tax applies the same tax rate to all taxpayers, regardless of income.

progressive tax  A tax that takes a larger share of income as income increases. A progressive income tax applies a higher tax rate to high incomes than to low incomes.

regressive tax  A tax that takes a smaller share of income as income increases. A regressive tax applies the same tax rate to everyone. But the tax paid represents a larger share of a poorer taxpayer's income than of a wealthier taxpayer's income.

Chapter Sections

8.1 – Introduction
8.2 – What Are Taxes and How Should They Be Levied?
8.3 – What Kinds of Taxes Will You Pay in Your Lifetime?
8.4 – How Do U.S. Governments Spend the Revenue They Raise

Chapter 12 - Textbook Scan