Taxes Reading

1. Which of the following best defines the “ability to pay” theory?

• a. Someone should only pay their hospital bills when and if they have the ability to pay.

• b. If the government owes a person money, the money will only be repaid if the government has enough money to do so.

• c. The higher a person’s income, the more they should be taxed.

• d. A person should only have to pay for the government programs that they have the ability to use.

2. Which of the following best defines the “benefits received” theory?

• a. Each individual only receives the amount of benefits that are paid into their healthcare system.

• b. Those receiving benefits for a government program are the ones who should be paying taxes for it.

• c. Taxes should be paid by everyone because everyone receives benefits from every program.

• d. Benefits are only received by those who need them. Those who don’t need them should not receive benefits.

3. Which of the following best states the purpose of the IRS?

• a. To ensure that everyone complies with the numerous tax laws in the United States.

• b. To get as much money out of the American people as possible.

• c. To catch as many people cheating on their taxes as possible.

• d. To oversee the rules and regulations of Congress and to ensure domestic tranquility.

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4. Which of the following describes a progressive tax?

• a. A tax which increases as the amount of money being taxed increases.

• b. A tax which gets smaller each year until it no longer has to be paid.

• c. A tax which gets larger each year as an individual gets older.

• d. A tax in which the amount paid increases as the ability to pay decreases.

5. Which of the following correctly identifies the date that a tax return is due each year?

• a. January 1^st

• b. February 14^th

• c. April 15^th

• d. December 31^st

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6. Which of the following best defines a regressive tax?

• a. A tax in which increases as the amount of money being taxed increases.

• b. A tax which gets smaller each year until it no longer has to be paid.

• c. A tax which gets larger each year as an individual gets older.

• d. A tax in which the amount paid increases as the ability to pay decreases.

7. What is an audit?

• a. It is when a taxpayer files his/her taxes each year.

• b. It is a close examination of a taxpayer’s income earned and expenses throughout the year.

• c. It is when a taxpayer owes more taxes because they have not paid enough throughout the year.

• d. It is the process the IRS uses to decide whether or not you should pay more taxes the next year.

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8. Which of the following is a tax on the amount of money earned each year?

• a. Progressive Tax

• b. Sales Tax

• c. Property Tax

• d. Income Tax

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9. What is a free rider?

• a. A person who is utilizing the benefits of government programs, but does not pay any taxes to support those programs.

• b. A person who works for the IRS and is responsible for auditing taxpayers.

• c. A person that is considered wealthy.

• d. A person is collecting social security because they have retired or are disabled.

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10. Which of the following is a tax added to the price of an item?

• a. Progressive Tax

• b. Sales Tax

• c. Property Tax

• d. Income Tax

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