Income Tax

An honor system under which you pay your taxes is called

• corporate compliance

• individual compliance

• mandatory compliance

• voluntary compliance

Federal and state income tax returns are due every year on

• January 31

• April 15

• July 15

• December 31

The division of the United States Treasury that is charged with the responsibility of maintaining confidence in and managing the federal tax system is called the

• Department of Justice

• President

• Internal Revenue Service

• Congress

Which of the following statements is TRUE?

• Many people are able to cheat the government and avoid paying taxes by using phony deductions or failing to report their income appropriately.

• Taxes paid provide services that impact only quality of life in the United States, not the standard of living.

• Everyone who receives a paycheck is required to submit a tax return to the IRS by April 15.

• Individuals do not have to pay taxes if they believe it is a violation of their religious beliefs.

If people in Group A are taxed MORE than people in Group B, it may

• decrease Group A’s incentive to earn more money

• have no effect on either group’s incentive to earn more money

• increase the Group B’s incentive to earn more money

• increase Group A’s incentive to earn more money

The federal income tax has different tax bracket percentages and income levels for single individual. As a result of this practice,

• the federal income tax is based on the benefits-received theory of taxation

• you pay different percentages of taxes as your income increases

• all of your income is taxed at the highest percentage rate

• the federal income tax is a regressive tax

The ability to pay tax principle says that

• people who can afford to pay taxes should pay more than those with limited ability to pay

• people who use certain public goods and services should pay for them with taxes

• the proportion of income paid in taxes decreases as income decreases

• the proportion of income paid in taxes increases as income increases

Oklahoma has a _____ income tax system.

• outdated

• passive

• progressive

• regressive

What is the primary purpose of income tax in a modern economy?

• To fund government services and infrastructure

• To penalize high earners

• To encourage savings

• To control inflation

Which of the following is a characteristic of a progressive income tax system?

• Higher income earners pay a higher percentage of their income in taxes

• Everyone pays the same percentage of their income in taxes

• Lower income earners pay a higher percentage of their income in taxes

• Taxes are only applied to luxury goods