8.1 - THE U.S. Tax System

What does FICA stand for?

• Federal Insurance Contributions Act

• Federal Inspection

  Cost

  Association

• Free Insurance Care Act

• Fine Insurance Cost Act

What does FICA consist of?

• Health insurance

• Social security & Medicare

• Employer sponsored retirement

• Federal & State taxes

The following options are benefits we receive as a result of government spending EXCEPT…

• Public school education

• Credit card debt forgiveness

• National Parks maintenance

• Air quality maintenance

What kind of tax system does the United States use?

• regressive

• proportional

• progressive

• disportional

A tax deduction…

• LOWERS a person's tax liability by LOWERING his/her taxable income.

• INCREASES a person's tax liability by LOWERING his/her taxable income.

• INCREASES a person's tax liability by INCREASING his/her taxable income.

• has no impact on the amount of taxes a person pays.

How much you pay in taxes is affected by all EXCEPT....

• Salary

• Age

• Cost of Living

• State you live in

A "progressive" tax system means that...

• All individuals pay the same tax rate

• You pay the tax rate of the highest bracket you fall into

• The higher your income is, the lower your tax rate becomes

• The higher your income is, the higher your tax rate becomes

If someone asks you what your “tax bracket” is, they are asking about your marginal tax rate which is…

• The tax rate you pay on your last dollar of income

• The total amount of money you paid in taxes last year

• The refund amount on your last tax return

• The average tax rate you pay on your entire income

What is the difference between gross pay and net pay?

• Gross pay is before taxes and deductions are subtracted; Net pay is your take-home pay

• Net pay is before taxes and deductions are subtracted; Gross pay is your take-home pay.

• There is no difference between gross and net pay

• Net pay is the total amount of money you get for a month. Gross pay is the total amount of money you get for a whole year.

Ben just received his first paycheck in the mail. All of the following are deductions he should expect to see EXCEPT...

• Healthcare

• Federal Income Tax

• Medicare

• Social Security