Taxes/Gov Spending

Front

Aria just started her first job and noticed deductions on her paycheck for Social Security and Medicare. Which tax is associated with these deductions?

Back

Payroll Tax

Answer explanation

The Payroll Tax is specifically designated for funding Social Security and Medicare programs. It is deducted from employees' wages and is the correct answer to the question.

Front

What type of spending includes Social Security?

Back

Mandatory Spending

Answer explanation

Social Security is classified as Mandatory Spending because it is required by law and must be funded each year, unlike Discretionary Spending which is subject to annual appropriations.

Front

Which of the following is NOT a part of discretionary spending? Defense Spending, Education, Food Stamps, Law Enforcement

Back

Food Stamps

Answer explanation

Food Stamps are part of mandatory spending, which is required by law, while Defense Spending, Education, and Law Enforcement are considered discretionary spending, which can be adjusted annually by Congress.

Front

During Benjamin's working years, social security tax takes a percentage of his earnings. Then when he retires or is disabled, what happens?

Back

he becomes eligible to receive monthly payments.

Answer explanation

During your working years, you pay social security tax, which funds the program. Upon retirement or disability, you become eligible to receive monthly payments, providing financial support.

Front

Arjun and Noah are discussing how some companies manage to pay less in taxes due to certain tax loopholes. These loopholes violate which criterion for effective taxes?

Back

equity

Answer explanation

Tax loopholes create unfair advantages, undermining the principle of equity in taxation. Effective taxes should ensure that individuals with similar abilities to pay contribute similarly, which loopholes disrupt.

Front

Which area of the national budget can the government CHOOSE where to spend their money?

Back

Discretionary

Answer explanation

The government can choose how to allocate funds in the discretionary area of the national budget. This includes spending on programs like education and defense, unlike mandatory spending, which is required by law.

Front

Which of the following is a characteristic of mandatory spending? Options: It is determined annually by Congress., It includes programs like Social Security and Medicare., It is primarily used for defense and education., It can be easily adjusted based on economic conditions.

Back

It includes programs like Social Security and Medicare.

Answer explanation

Mandatory spending includes programs like Social Security and Medicare, which are required by law. This distinguishes it from discretionary spending, which is determined annually by Congress.

Front

Which of the following is a primary source of revenue for the federal government? Estate Tax, Individual Income Tax, Sales Tax, Property Tax

Back

Individual Income Tax

Answer explanation

The Individual Income Tax is the largest source of revenue for the federal government, accounting for a significant portion of federal tax revenue, unlike the Estate Tax, Sales Tax, and Property Tax, which are less significant at the federal level.

Front

What is the main purpose of a progressive tax system?

Back

To reduce income inequality

Answer explanation

The main purpose of a progressive tax system is to reduce income inequality by taxing higher incomes at higher rates, ensuring that wealthier individuals contribute a fairer share to government revenue.

Front

Which of the following is an example of a regressive tax? Options: Capital Gains Tax, Corporate Tax, Sales Tax, Income Tax

Back

Sales Tax

Answer explanation

Sales tax is considered a regressive tax because it takes a larger percentage of income from low-income earners compared to high-income earners, as everyone pays the same rate regardless of their income level.