C10L6

What is a consumption tax?

• A tax on the purchase of goods or services in the form of sales tax, excise tax, and other special taxes

• A tax on income

• A tax on property

• A tax on exports

Fill in the blank: Sales Tax is a tax on goods and services that goes to a ________ or local government.

• state

• federal

• international

• private

Excise Tax is a tax on certain goods that aren’t typically considered a necessity; sometimes called a ________ tax.

• luxury

• income

• property

• sales

According to the passage, what happens when the price of an item increases?

• The taxes stay the same

• The taxes decrease

• The taxes increase

• The taxes disappear

According to the passage, what is a consumption tax?

• A tax on the purchase of goods or services

• A tax on the money you earn

• A tax on property

• A tax on gifts

Fill in the blank: You pay income tax when you ______ money; you pay consumption tax when you ______ money on certain items.

• earn; spend

• spend; earn

• save; borrow

• borrow; save

According to the passage, which of the following is NOT funded by taxes?

• A) Roads

• B) Public schools

• C) Private homes

• D) Hospitals

Taxes help pay for ________, police and fire departments, and hospitals.

• roads

• restaurants

• movie theaters

• shopping malls

In your own words, explain why taxes are important according to the passage.

• Taxes are important because they help fund public services and infrastructure.

• Taxes are important because they increase personal wealth.

• Taxes are important because they reduce government spending.

• Taxes are important because they eliminate the need for laws.