Policy Concepts
Adjusted Gross Income (AGI)
Adjusted gross income (AGI) is total gross income (all income from all sources) minus specific deductions. Deductions may include business expenses, education expenses (including both tuition and student loan interest), health savings account deductions, certain moving expenses, alimony, retirement contributions, and other deductions. Adjusted Gross Income is calculated before tax credits are applied. For an explanation of deductions and credits, see below.
Cap & Trade
Cap and trade is an environmental policy tool that establishes mandatory cap on emissions while providing polluters some flexibility in how they comply. A polluter that produces emissions well-below the limit may sell some of their rights to emit pollution to another polluter who produces emission in excess of the limit. The latter can then continue to emit at their preferred levels without exceeding the mandatory cap, because the excess is compensated by a corresponding deficit in emissions from the first polluter.
Charter Schools
Charter schools are primary or secondary schools that receive public money but are not subject to some of the rules, regulations, and statutes that apply to other public schools.This is in exchange for some type of accountability for producing certain results, which are set forth in each school's charter. Charter schools are attended by choice. While charter schools provide an alternative to other public schools, they are part of the public education system and are not allowed to charge tuition.
Deduction v. Credit
A tax deduction is an amount subtracted from an individual's gross income. Deductions are used to calculate Adjusted Gross Income (AGI) and are applied before an individual's tax liability is calculated. If the deduction is large enough, it can reduce an individual's income so much that the individual is bumped down to a lower tax bracket. A tax credit, on the other hand, is an amount of money that can offset an individual's tax liability. Credits are applied after an individual's tax liability has been calculated using a tax table or other method.
Defined-Benefit Plan/Pension v. Defined-Contribution Plan/401(k)
A defined benefit plan is a retirement plan set up to pay a fixed annual amount to eligible employees during their retirement years. It's called “defined benefit” because your contributions are based on the amount of future benefits. The formulas used to create the plan look at how much money must be contributed now in order for there to be enough money to pay a fixed amount of benefits to recipients in the future.
With a defined benefit plan, the desired benefit at retirement is predetermined, and contributions are made each year. If investment return is greater than expected, smaller contributions may be needed in a given year. If investment return is less than expected, greater contributions may be required. At retirement, regardless of investment fluctuations, the desired benefit is obtained.
A defined contribution plan is a retirement plan that requires that an individual account be set up for each participant in the plan -- even if the only participant in the plan is you. It's called "defined contribution" because you can only contribute a fixed maximum amount to the plan each year. The contributions aren't based on your expected retirement benefit, but rather on a percentage that's specified in the plan.
The most common type of defined contribution plan is the 401(k) plan. With a 401(k), a percentage of income is placed in an account to be invested each year. Retirement income is determined by the amount of money in each individual's account at retirement. If investment return is better than expected, more money is available for retirement. If investment return is less than expected, the retirement income may fall short of retirement needs.
Mitigating Circumstances
In the context of criminal law, mitigating circumstances are specific factors that decrease culpability or the severity of a sentence. These will usually be listed explicitly in law. For example, in some states being under the age of 18 can be considered a mitigating circumstance in certain violent crimes.
Net Metering
This is a policy that allows customers' electricity meters to run both ways, so to speak. A utility customer who produces some amount of renewable energy (for example, a residential customer who has solar panels on their house), but also purchases electricity from a utility, may deduct the value of the electricity that the customer produces from their total electricity bill. In some cases, the customer produces so much electricity that the utility must pay the customer a credit. Customers who produce renewable energy must have their source hooked up to the electricity grid in order to be eligible for net metering.
Renewable Energy Credit (REC)
A Renewable Energy Credit (REC), also known as a green tag or renewable energy certificate, represents the property rights to the environmental, social, and other non-power qualities of renewable electricity generation. An REC, and its associated attributes and benefits, can be sold separately (unbundled) from the underlying physical electricity associated with a renewable-based generation source or together (bundled). When unbundled, it is also known as a tradable renewable energy certificate (TREC).
In essence, this allows utility companies and other electricity providers to purchase electricity from renewable energy producers and have that electricity count toward the state's renewable portfolio standard.
Renewable Portfolio Standard (RPS)
This requires electricity utilities to produce or purchase a specific quantity of renewable energy, in percentage, megawatt-hour, or megawatt terms, by a certain date. For example, a state may require 3 percent of all electricity sold by utilities to be derived from renewable sources.
School "Vouchers"
A school voucher, also called an education voucher, is a certificate issued by the government, which parents can apply toward tuition at a private school. It can also be used to reimburse home schooling expenses. An alternative to the education voucher is the education tax credit, which allows individuals to use their own money to pay for the education of their children or to donate money towards the education of other children.
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