may buy and sell among themselves. The total quantity of permits is set
by government policy.
progressive tax
A tax that takes a larger percentage of income at higher levels of income.
proportional tax
A tax that takes a constant percentage of income at all levels of income.
regressive tax
A tax that takes a greater percentage of income at lower levels of income.
average tax rate
The ratio of total taxes paid to total income earned.
marginal tax rate
The fraction of an additional dollar of income that is paid in taxes.
tax bracket
A range of taxable income for which there is a constant marginal tax rate.
direct burden
For an individual tax, the amount of money that is collected from
taxpayers.
excess burden
The allocative inefficiency or deadweight loss generated by a tax.