Chapter 14: Taxes and Government Spending Review

value-added tax

• tax on the value added at every stage of the production process

• profits from the sale of an asset held for 12 months or longer

• proportional tax on individual income after a specified threshold has been reached

• personal income tax rate that applies to cases in which taxes would otherwise fall below a certain level

• general revenue tax levied on the manufacture or sale of selected items

capital gains

• tax on the value added at every stage of the production process

• profits from the sale of an asset held for 12 months or longer

• proportional tax on individual income after a specified threshold has been reached

• personal income tax rate that applies to cases in which taxes would otherwise fall below a certain level

• general revenue tax levied on the manufacture or sale of selected items

flat tax

• tax on the value added at every stage of the production process

• profits from the sale of an asset held for 12 months or longer

• proportional tax on individual income after a specified threshold has been reached

• personal income tax rate that applies to cases in which taxes would otherwise fall below a certain level

• general revenue tax levied on the manufacture or sale of selected items

alternative minimum tax

• tax on the value added at every stage of the production process

• profits from the sale of an asset held for 12 months or longer

• proportional tax on individual income after a specified threshold has been reached

• personal income tax rate that applies to cases in which taxes would otherwise fall below a certain level

• general revenue tax levied on the manufacture or sale of selected items

excise tax

• tax on the value added at every stage of the production process

• profits from the sale of an asset held for 12 months or longer

• proportional tax on individual income after a specified threshold has been reached

• personal income tax rate that applies to cases in which taxes would otherwise fall below a certain level

• general revenue tax levied on the manufacture or sale of selected items

What is the main purpose of a sin tax?

• revenue generation

• behavior adjustment

• income redistribution

• resource allocation

Which of the following best identifies the incidence of the individual income tax?

• frequency

• workers

• corporation

• wages

An economist might argue that a progressive income tax is effective because it is ________.

• equitable

• simple

• beneficial

• profitable

Which of the following is most like a national sales tax?

• an excise tax

• a sin tax

• a value-added tax (VAT)

• none of the above

Which statement is most accurate?

• The debt ceiling is a requirement that new spending proposals or tax cuts must be offset by reductions elsewhere.

• The debt ceiling authorizes spending on new entitlement programs.

• The debt ceiling permits borrowing for expenditures that have already been authorized by Congress and the president.

• The debt ceiling is the total amount borrowed from investors to finance the government's deficit spending.