Personal Finance - Taxes

A tax deduction is:

• a reduction of income that is able to be taxed

• an increase in taxable income

• a type of tax credit

• a penalty for late tax payment

A tax credit is a dollar-for-dollar reduction in a tax.

• True

• False

The main purpose of sales tax is to:

• generate revenue for the government

• encourage consumer spending

• reduce inflation

• support local businesses

Property taxes are paid on property such as real estate, boats, automobiles, and recreational vehicles.

• True

• False

Estate tax is a tax on the value of property someone owns at their death.

• True

• False

A tariff is:

• a tax on imports or exports

• a type of currency

• a trade agreement

• a shipping method

A progressive tax takes a larger percentage of income from high-income groups than from low-income groups.

• True

• False

A regressive tax is:

• A tax that takes a larger percentage of income from high-income earners than from low-income earners.

• A tax that takes a larger percentage of income from low-income earners than from high-income earners.

• A tax that takes the same percentage of income from all income earners.

• A tax that is only applied to luxury goods.

Federal payroll taxes mainly support which programs?

• Social Security and Medicare

• Unemployment Insurance

• Defense and Military

• Education and Training

Medicare provides medical benefits for people who are 65 or older.

• True

• False