Fiscal Policy: Taxes Flashcards
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Questions and Answers

What is a progressive tax?

  • A tax in which wage earners with lower incomes are taxed at a higher percentage rate than earners with higher incomes
  • An amount taken from income or added to purchases by various levels of government
  • A tax in which wage earners are taxed at the same percentage rate, regardless of their income
  • A tax in which wage earners with higher incomes are taxed at a higher percentage rate than earners with lower incomes (correct)

    • What is a proportional tax?

  • A tax where higher incomes are taxed at higher rates
  • A tax specifically for property transactions
  • A tax where wage earners are taxed at the same percentage rate, regardless of their income (correct)
  • A tax where lower incomes are taxed at higher rates

    • What is a regressive tax?

  • A tax in which wage earners with lower incomes are taxed at a higher percentage rate than earners with higher incomes (correct)
  • A tax that applies to specific products
  • A general tax on income that helps fund government services
  • A tax in which wage earners with higher incomes are taxed at a higher percentage rate

    • What is a society?

    <p>A group of individuals, usually within a community, who share traditions, interests, and establishments.</p> Signup and view all the answers

    What is a tax?

    <p>An amount taken from income or added to purchases by various levels of government.</p> Signup and view all the answers

    What type of tax is income tax?

    <p>Direct tax</p> Signup and view all the answers

    What are examples of programs or projects funded by taxes in the United States?

    <p>All of the above</p> Signup and view all the answers

    A sales tax is a type of?

    <p>Indirect tax</p> Signup and view all the answers

    How are progressive taxes and regressive taxes similar?

    <p>Both are determined based on income.</p> Signup and view all the answers

    A(n) ____________ policy is employed when the government chooses to run a larger deficit.

    <p>expansionary</p> Signup and view all the answers

    How is an excise tax different from a sales tax?

    <p>An excise tax applies to specific products.</p> Signup and view all the answers

    High government expenditures can lead to a bigger?

    <p>deficit</p> Signup and view all the answers

    Property taxes are usually determined based on?

    <p>The value of the property.</p> Signup and view all the answers

    Which best explains how contractionary policies can hamper economic growth?

    <p>They reduce disposable income.</p> Signup and view all the answers

    What gives the US government the power to collect taxes?

    <p>The Constitution.</p> Signup and view all the answers

    Study Notes

    Tax Types

    • Progressive Tax: Higher-income earners pay a greater percentage than lower-income earners, promoting equity.
    • Proportional Tax: All wage earners pay the same percentage regardless of income, maintaining uniformity in taxation.
    • Regressive Tax: Lower-income earners face a higher tax percentage than higher-income earners, which can increase economic disparity.
    • Direct Tax: Income tax is classified as a direct tax, directly taken from individuals' earnings.
    • Indirect Tax: Sales tax falls under indirect tax, as it is added to purchases rather than deducted from income.

    Taxation and Funding

    • Taxes are governmental charges on income or purchases, essential for funding public services and infrastructure.
    • Programs typically funded by taxes in the U.S. include maintaining state parks, constructing highways, and garbage collection.
    • Property taxes are assessed based on the property value, ensuring that the tax burden is proportional to the wealth represented by held property.

    Economic Policies

    • Expansionary Policy: Implemented when the government opts for larger deficits, often to stimulate economic growth.
    • Contractionary Policy: These policies can hinder economic growth by reducing disposable income available for spending.

    Tax Characteristics

    • Excise taxes target specific products, unlike sales taxes which apply broadly to most goods.
    • Both progressive and regressive taxes are influenced by income levels, yet they operate in fundamentally opposing ways to impact taxpayers.

    Constitutional Power

    • The U.S. government's authority to levy taxes is derived from the Constitution, underpinning its fiscal policies and financial operations.

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    Description

    This quiz explores key concepts in fiscal policy, focusing on different types of taxes such as progressive, proportional, and regressive taxes. Test your understanding of how these tax structures affect wage earners based on their income levels.

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