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PEP / Pease (Tax Policy) - PEP is Personal
Exemption Phase-out designed to eliminate
personal income exemptions for high
earners; 3) Pease is a similar phase-out, but
instead of applying to personal exemption, it
applies to most of the itemized deductions of
a taxpayer’s claims (mortgage interest,
charitable gifts, state & local taxes paid,
etc.); Pease is named after Representative
Donald Pease (D-OH) who pushed for its
enactment in 1990.

Present Value - A single number that
expresses a flow of current and future
income (or payments) in terms of an
equivalent lump sum received (or paid)
today. The present value depends on the
rate of interest used (the discount rate). For
example, if $100 is invested on January 1 at
an annual interest rate of 5 percent, it will
grow to $105 by January 1 of the next year.
Hence, at an annual 5 percent interest rate,
the present value of $105 payable a year
from today is $100.

Patient Protection and Affordable Care
Act (PPACA) – A federal statute as the
result of the healthcare reform. Signed into
law on 3/23/10, the PPACA aims to expand
Medicaid eligibility, incentivize businesses to
provide health care benefits, prohibit denial
of coverage/claims based on pre-existing
conditions, establish health insurance
exchanges, and support for medical
research. The costs of these provisions are
offset by a variety of taxes, fees, and cost-
saving measures, such as new Medicare
taxes for high-income brackets, taxes on
indoor tanning, improved fairness in the
Medicare Advantage program relative to
traditional Medicare, and fees on medical
devices and pharmaceutical companies.

Productivity - Average real output per unit
of input. Labor productivity is average real
output per hour of labor. The growth of labor
productivity is defined as the growth of real
output that is not explained by the growth of
labor input alone. Total factor productivity is
average real output per unit of combined
labor and capital services. The growth of
total factor productivity is defined as the
growth of real output that is not explained by
the growth of labor and capital. Labor
productivity and total factor productivity differ
in that increases in capital per worker raise
labor productivity but not total factor
productivity.

Tax Expenditures - Losses to the U.S.
treasury from granting certain deductions,
exemptions, or credits to specific categories
of taxpayers. Tax breaks are one method
Congress uses to promote certain policy
objectives. For example, deductions for
mortgages encourage home ownership,
while credits for childcare expenses allow
single parents to work. Tax expenditures are
an alternative to direct government spending
on policy programs.

Troubled Asset Relief Program (TARP) -
A program that permits the Secretary of the
Treasury to purchase or insure troubled
financial assets. Authority for the program
was initially set by the Emergency Economic
Stabilization Act of 2008 at $700 billion in
assets outstanding at any one time and
remains in effect until October 3, 2010. The
TARP’s activities have included the
purchase of preferred stock from financial
institutions, support to automakers and
related businesses, a program to avert
housing foreclosures, and partnerships with
the private sector.

KP
CB www.kpcb.com
USA Inc. xxiv
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