Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | corporate income tax | g. | incidence of a
tax | b. | estate tax | h. | deductions | c. | regressive tax | i. | real property | d. | proportional
tax | j. | Medicaid | e. | individual income tax | k. | withholding | f. | gift
tax | l. | Social
Security |
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1.
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a tax on the total value of the money and property of a person who has
died
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2.
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a tax for which the percentage of income paid in taxes remains the same for all
income levels
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3.
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a tax on the amount of money a person earns
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4.
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a tax for which the percentage of income paid in taxes decreases as income
increases
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5.
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a tax on the value of a company’s profits
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6.
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taking tax payments out of an employee’s pay before he or she receives
it
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7.
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variable amounts that you can subtract from your gross income
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8.
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the final burden of a tax
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9.
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entitlement program that benefits low-income families, some people with
disabilities, and elderly people in nursing homes
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10.
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physical possessions, such as land and buildings
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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11.
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What do taxes collected under the Federal Insurance Contribution Act (FICA)
fund?
a. | Social Security and Medicaid | b. | Social Security and
Medicare | c. | Medicare and Medicaid | d. | Medicaid and Supplemental Security
Income |
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12.
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Which of the following defines a means-tested program?
a. | Eligibility depends on income. | b. | Any person who is a U.S. citizen is
eligible. | c. | Age is a major criterion for eligibility. | d. | People pay first and
receive benefits later. |
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13.
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Who generally bears most of a sales tax when the demand for the good taxed is
inelastic?
a. | the retailer | c. | the wholesaler | b. | the consumer | d. | the producer |
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14.
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What do Social Security taxes pay for?
a. | benefits to federal workers and military personnel | b. | benefits to those
who are unemployed | c. | transportation and training expenses for
low-income people | d. | benefits to older citizens, surviving family
members of wage earners, and people with certain disabilities |
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15.
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Which of the following is one reason the federal government collects income
taxes as a person earns?
a. | so that people do not realize exactly how much they are paying | b. | so that the money
can be put aside until it is needed | c. | so that the government can pay bills as they
come due | d. | so that taxpayers can qualify for refunds of excess
tax |
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16.
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What is a major difference between an operating budget and a capital
budget?
a. | In an operating budget, legislation is needed; in a capital budget, no legislation is
needed. | b. | An operating budget is raised by bonds; a capital budget is raised by
taxes. | c. | An operating budget consists of small amounts of money; a capital budget consists of
large amounts of money. | d. | An operating budget is for day-to-day expenses;
a capital budget is for investment spending. |
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17.
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What is an entitlement?
a. | a social welfare program providing benefits to people who meet certain eligibility
requirements | b. | a social welfare program paying bills for government spending such as supplies and
utilities | c. | a social welfare program spending funds over which legislators have direct
control | d. | a social welfare program providing payments that the government receives for certain
services |
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18.
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What is the major source of tax revenue for local governments?
a. | inheritance taxes | c. | property taxes | b. | income taxes | d. | sales taxes |
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Short Answer
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Reading a Chart
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19.
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What percentage of local revenue comes from property taxes?
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20.
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What is the largest category of local spending?
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21.
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What percentage of local spending is on police protection?
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Essay
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Critical Thinking
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22.
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Expressing Problems Clearly What does it mean that the federal income tax
is a progressive tax?
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23.
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Recognizing Ideologies Explain the four characteristics of a good
tax.
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24.
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Making Comparisons What is a balanced budget, and why is it so much
easier to balance state budgets than the federal budget?
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