What are taxes?

• Voluntary donations to the government

• Mandatory payments to the government

• Optional fees for public services

• Charitable contributions to society

Which of the following is a purpose of taxation?

• To decrease government revenue

• To regulate the economy

• To eliminate fiscal policy

• To reduce public spending

What is one way taxes are used to redistribute income?

• By increasing corporate profits

• Through transfer payments

• By reducing government jobs

• Through private investments

Why does the government need to have money?

• To provide public goods such as schools, libraries, fire and police, safe highways

• To increase personal wealth of citizens

• To fund private businesses

• To reduce taxes for the wealthy

Which principle of taxation states that people who directly benefit from a service should pay for it?

• Ability-to-pay

• Benefits received

• Progressive tax

• Regressive tax

According to the ability-to-pay principle, who should pay more taxes?

• People who use more public services

• People with more wealth or income

• People who live in urban areas

• People who own businesses

Which of the following is an example of a tax based on the benefits received principle?

• Federal Income Tax

• Sales Tax

• Corporate Tax

• Inheritance Tax

Which characteristic of an effective tax ensures it is easily understood?

• Equity

• Efficiency

• Simplicity

• Certainty

What does the equity characteristic of a good tax ensure?

• Taxes are collected quickly

• Taxes are fair and balanced

• Taxpayers know when to pay

• Taxes are easy to understand

Which characteristic of a good tax involves collecting taxes without spending too much time or money?

• Simplicity

• Certainty

• Equity

• Efficiency