Economics Taxes

Which of the following would be a progressive tax?

• People earning $35,000 pay 10 percent tax, while people earning $100,000 pay 30 percent tax.

• People pay 10 percent on property whether it is worth $50,000 or $500,000.

• All people pay a 15 percent income tax.

• Everyone pays a 5 percent sales tax.

What provides the largest portion of federal revenue?

• corporate taxes

• tariffs

• FICA taxes

• individual income taxes

Most federal mandatory spending is spent on

• defense.

• interest on the national debt.

• salaries for people in the federal government.

• entitlements (social programs)

What is withholding?

• a statement to employees telling them how much taxes they owe.

• a way of collecting taxes from the salaries of employees.

• a pension paid to retired people.

• a kind of insurance for employees who lose their jobs.

Why does the federal government collect income taxes in installments rather than waiting until the end of the year?

• It is easier for taxpayers to pay that way, but inconvenient for the government.

• It is easier for the government to collect that way, but harder for taxpayers.

• It is more convenient for the government and taxpayers to collect in installments.

• It is optional; people may pay all their taxes at once at the end of the year.

What gives the U.S. government the right to collect taxes?

• custom of government

• state laws in all 52 states

• the U.S. Constitution

• an act of the U.S. Congress

What determines the incidence of tax?

• the elasticity of demand of the product taxed

• the laws of the government that imposes the tax

• the wealth of the people who are taxed

• the willingness to pay of the people who are taxed

What is the main purpose of federal excise taxes on tobacco and alcohol products?

• to raise money for the government

• to make it expensive to import these products

• to make it harder for companies to sell these products

• to discourage the use of these products

What is one of the four characteristics of a good tax?

• can't tax imports

• equity (fair)

• property

• worth

What are taxes?

• Government revenue.

• Money you must pay.

• A part of your income.

• Extra money collected by retailers.