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Nelson Education > Higher Education > Principles of Microeconomics, Fourth Canadian Edition > Student Resources > Glossary of Key Terms > Chapter 12

Chapter 12. The Design of the Tax System

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


A

ability-to-pay principle
the idea that taxes should be levied on a person according to how well that person can shoulder the burden

average tax rate
total taxes paid divided by total income


B

benefits principle
the idea that people should pay taxes based on the benefits they receive from government services

budget deficit
an excess of government spending over government receipts

budget surplus
an excess of government receipts over government spending


H

horizontal equity
the idea that taxpayers with similar abilities to pay taxes should pay the same amount


L

lump-sum tax
a tax that is the same amount for every person


M

marginal tax rate
the extra taxes paid on an additional dollar of income


P

progressive tax
a tax for which high-income taxpayers pay a larger fraction of their income than do low-income taxpayers

proportional tax
a tax for which high-income and low-income taxpayers pay the same fraction of income


R

regressive tax
a tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers


V

vertical equity
the idea that taxpayers with a greater ability to pay taxes should pay larger amounts

 

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