Taxes and Fiscal Policy

What is included in the average effective federal tax rate according to the notes?

• Individual income, payroll, corporate income, estate, and excise taxes

• Only individual income taxes

• Only corporate income taxes

• Only payroll taxes

Answer explanation

The average effective federal tax rate includes various types of taxes, specifically individual income, payroll, corporate income, estate, and excise taxes, making the first choice the correct answer.

Which tax is usually calculated as a percentage of salaries?

• Income Tax

• Property Tax

• Payroll Tax

• Value Added Tax

Answer explanation

Payroll Tax is calculated as a percentage of salaries, specifically to fund social insurance programs. In contrast, Income Tax is based on total earnings, Property Tax is on property value, and Value Added Tax is on goods and services.

What is the main characteristic of a consumption tax?

• It varies based on income

• It is the same rate for all goods and services

• It is only for luxury items

• It is only for imported goods

Answer explanation

A consumption tax is applied uniformly to all goods and services, meaning it has the same rate regardless of the item. This distinguishes it from other taxes that may vary based on income or target specific goods.

What is the significance of keeping business taxes low for states?

• To increase public spending

• To attract companies and their jobs

• To reduce inflation

• To support local businesses

Answer explanation

Keeping business taxes low is significant for states as it helps attract companies and their jobs, fostering economic growth and employment opportunities.

What is the total percentage of local government revenue in 2017 from property taxes, sales taxes, and income taxes combined?

• 39.4%

• 50%

• 60%

• 70%

Answer explanation

In 2017, local government revenue from property taxes, sales taxes, and income taxes combined accounted for 39.4%. This figure represents the correct choice among the options provided.

What is one of the main purposes of tax revenue?

• To increase personal savings

• To pay for public works and community programs

• To reduce government size

• To fund private businesses

Answer explanation

One of the main purposes of tax revenue is to pay for public works and community programs, which are essential for maintaining infrastructure and providing services that benefit society as a whole.

How many House Appropriations subcommittee markups and votes are there?

• 10

• 12

• 15

• 8

Answer explanation

The House Appropriations subcommittee conducts a total of 12 markups and votes, which is essential for determining funding allocations for various government programs.

What is the final step in the budget process before it becomes law?

• Senate floor vote

• House floor vote

• President vetoes or signs into law

• Conference committee resolution

Answer explanation

The final step in the budget process is when the President vetoes or signs the budget into law, making it official. This step follows the votes in both the House and Senate.

Which tax source contributes the least to the total revenue?

• Individual Income Taxes

• Corporate Income Taxes

• Payroll Taxes

• Other Taxes

Answer explanation

Among the tax sources listed, 'Other Taxes' contributes the least to total revenue, as individual income taxes, corporate income taxes, and payroll taxes typically generate more significant amounts for government funding.

What type of spending is required by law and can be changed by Congress?

• Discretionary

• Interest on Debt

• Mandatory

• Optional

Answer explanation

Mandatory spending is required by law, covering programs like Social Security and Medicare. While it is difficult to change, Congress has the authority to modify these laws, making 'Mandatory' the correct answer.