Progressive Tax - Tax that takes larger share of income as the income grows, regressive tax - tax that takes a smaller share of income as the income grows, proportional tax - tax rate that stays the same regardless of income, voluntary compliance - tax system where all citizens prepare and file tax returns on their own, tax evasion - intentinal failure to pay taxes, audit - examination of income tax returns by the IRS, IRS - Internal Revenue Service, part of the US Treasury, that collects income taxes and enforces tax laws, Exemption - an amount you can subtract from your income for each person who depends on you to live, itemized deductions - expenses you can subtract from your gross income to determine your taxable income, tax credit - a reduction of taxes owed, exempt status - available option to those who know they will not earn enough in one year to owe income taxes, April 15 - deadline each year to file your tax return,

PF Chapter 3

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