Video: Taxes & the Budget

Taxation (Macro)

direct taxation: taxes paid directly to the government (i.e. income and corporate tax)

indirect taxation: taxes paid to the government via an intermediary (i.e. sales tax, value-added tax - VAT, sin taxes)

progressive taxation: tax rates that increase as income goes up (i.e. most countries income/corporate tax regimes)

regressive taxation: tax rates that decrease as income goes up (all sales taxes are regressive in nature...why?!)

proportional taxation: tax rate that are the same for all (i.e. everyone pays 15% regardless of income, seen in many East European countries like Ukraine).

transfer payments: payment by government as a "gift" or aid, not for g/s and not counted in GDP...a transfer (type of redistribution from richer to poorer includes welfare checks and social security).

Laffer curve: a graph showing the relationship between tax rate and government tax revenue (at zero tax rate, there is zero government revenue, at 100% tax rate, there is zero government tax revenue because no one works...the ideal is somewhere in the middle where revenue peaks).