TCI Econ Alive Lessons 11 & 12, UNIT 4

When federal expenditures exceed federal tax revenues, how does the government fund the deficit?

• by printing additional paper money

• by asking not-for-profit corporations for help

• by taking a loan from the Federal Reserve Bank

• by borrowing money through the sale of bonds

Which of these is a progressive tax?

• excise tax

• luxury tax

• property tax

• Social Security tax

The Internal Revenue Service routinely collects taxes from employees through a system of

• assessments.

• audits.

• entitlement.

• withholding.

Progressive taxes

• applies a higher tax rate to high incomes than to low incomes.

• applies the same tax rate to all taxpayers, regardless of income.

• applies a higher tax rate to low incomes than to high incomes.

• the idea that citizens who benefit from a particular government program should pay for it,

Proportional taxes

• applies a higher tax rate to high incomes than to low incomes.

• applies the same tax rate to all taxpayers, regardless of income.

• applies a higher tax rate to low incomes than to high incomes.

• the idea that citizens who benefit from a particular government program should pay for it,

Federal taxes are

• Proportional

• Regressive

• Flat

• Progressive

State of Michigan taxes are

• Proportional

• Regressive

• Ability-to-Pay

• Progressive

Regressive taxes

• applies a higher tax rate to high incomes than to low incomes.

• applies the same tax rate to all taxpayers, regardless of income.

• applies a higher tax rate to low incomes than to high incomes.

• the idea that citizens should be taxed according to their income or wealth

Which of these taxes is the leading source of revenue for the federal government?

• corporate income taxes

• individual income taxes

• inheritance taxes

• payroll taxes

Most sales taxes are regressive because

• taxable purchases are capped at $50,000 a year.

• wealthier people pay less tax on a purchase than poorer people would pay on the same item.

• most people cannot afford to buy such luxury goods as yachts, furs, and diamonds.

• poorer taxpayers spend a larger proportion of their income on taxable goods and services than do wealthier taxpayers.