finplan exam 2
Terms
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- a payment required by a local, state, or federal government of individuals and organizatons that have property, receive income, or engage in certain activities
- tax
- philosophy of taxation stating that those who receive the benefits of a particular public expenditure should pay for it
- benefits-received philosophy
- philosophy of taxation stating that those with higher incomes should pay proportionally more taxes than those with lower incomes
- ability-to-pay philosophy
- tax approach requiring those who earn more to pay more in taxes
- progressive tax
- tax approach that takes a smaller percentage of income as income rises
- regressive tax
- the tax rate applied to the last dollar of earnings
- marginal tax rate
- amount of taxes paid divided by income; also called the effective tax rate
- average tax rate
- a notice sent to a taxpayer from the IRS correcting an oversight or error and indiviating additonal taxes owed
- automated adjustment notice
- thorough examination by the IRS of all or part of a tax return
- tax audit
- an IRS audit that takes place by mail
- correspondence audit
- legally reduiving the amoung of taxes you pay
- tax avoidance
- illegally reducing the amount of taxes you pay
- tax evasion