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Questions and Answers
_________ of a tax is the term for the final burden of the tax.
_________ of a tax is the term for the final burden of the tax.
Incidence
Exceptions or oversights in the tax law that allow taxpayers to avoid taxes are called ___ _________.
Exceptions or oversights in the tax law that allow taxpayers to avoid taxes are called ___ _________.
tax loopholes
The largest tax levied on the wages, salaries, and other income of individuals is known as the __________ ______ tax.
The largest tax levied on the wages, salaries, and other income of individuals is known as the __________ ______ tax.
individual income
The ________ _______ _______ _____ is the branch of the U.S. Treasury Department that collects taxes.
The ________ _______ _______ _____ is the branch of the U.S. Treasury Department that collects taxes.
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A general state or city tax levied on a product at the time of sale is called a _____ ___.
A general state or city tax levied on a product at the time of sale is called a _____ ___.
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_________ of a tax is the term for the final burden of the tax.
_________ of a tax is the term for the final burden of the tax.
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Exceptions or oversights in the tax law that allow taxpayers to avoid taxes are called ___ _________.
Exceptions or oversights in the tax law that allow taxpayers to avoid taxes are called ___ _________.
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The largest tax levied on the wages, salaries, and other income of individuals is known as the __________ ______ tax.
The largest tax levied on the wages, salaries, and other income of individuals is known as the __________ ______ tax.
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The ________ _______ _______ _____ is the branch of the U.S. Treasury Department that collects taxes.
The ________ _______ _______ _____ is the branch of the U.S. Treasury Department that collects taxes.
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A general state or city tax levied on a product at the time of sale is called a _____ ___.
A general state or city tax levied on a product at the time of sale is called a _____ ___.
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An effective tax is one that exhibits one or more of the following characteristics. Which option is correct? A.equity B.simplicity C.efficiency D.all of the above
An effective tax is one that exhibits one or more of the following characteristics. Which option is correct? A.equity B.simplicity C.efficiency D.all of the above
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"Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive." So states the _______ _________.
"Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive." So states the _______ _________.
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The terms 'proportional', 'progressive', and 'regressive' refer to _____ __ ____.
The terms 'proportional', 'progressive', and 'regressive' refer to _____ __ ____.
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In discussing taxes, which is the opposite of regressive? A.progressive B.flat C.value-added D.alternative
In discussing taxes, which is the opposite of regressive? A.progressive B.flat C.value-added D.alternative
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Which type of tax is levied on the sale of an asset held for 12 months or longer? A.sales tax B.marginal tax C.flat tax D.capital gains tax
Which type of tax is levied on the sale of an asset held for 12 months or longer? A.sales tax B.marginal tax C.flat tax D.capital gains tax
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What is the total amount borrowed from investors to finance the government's deficit spending?
What is the total amount borrowed from investors to finance the government's deficit spending?
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What is defined as an annual budget in which expenditures equal revenues?
What is defined as an annual budget in which expenditures equal revenues?
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What term refers to a per person basis; total divided by population?
What term refers to a per person basis; total divided by population?
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What part of the economy is made up of private individuals and businesses?
What part of the economy is made up of private individuals and businesses?
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What are program(s) or benefit(s) that use established eligibility requirements to provide health, nutritional, or income supplements to individuals?
What are program(s) or benefit(s) that use established eligibility requirements to provide health, nutritional, or income supplements to individuals?
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Which is the primary source of revenue for the federal government? A.borrowing B.duties C.taxes D.fees
Which is the primary source of revenue for the federal government? A.borrowing B.duties C.taxes D.fees
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Which type of tax is levied on specific items or services, including gasoline and telephone services?
Which type of tax is levied on specific items or services, including gasoline and telephone services?
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Which of the following could be considered a synonym for FICA? A.intergovernmental revenues B.excise tax C.corporate income tax D.payroll tax
Which of the following could be considered a synonym for FICA? A.intergovernmental revenues B.excise tax C.corporate income tax D.payroll tax
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Which of the following is NOT an example of federal mandatory spending? A.Social Security B.national defense C.income security D.Medicare
Which of the following is NOT an example of federal mandatory spending? A.Social Security B.national defense C.income security D.Medicare
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Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through ___ ____________ ______.
Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through ___ ____________ ______.
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The federal government receives the majority of intergovernmental funds from states.
The federal government receives the majority of intergovernmental funds from states.
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Only five states-Alaska, Delaware, Montana, New Hampshire, and Oregon-have a general sales tax.
Only five states-Alaska, Delaware, Montana, New Hampshire, and Oregon-have a general sales tax.
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All but seven states-Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming-rely on the individual income tax for revenue.
All but seven states-Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming-rely on the individual income tax for revenue.
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The largest category of state spending is education.
The largest category of state spending is education.
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State governments have primary responsibility for elementary and secondary education.
State governments have primary responsibility for elementary and secondary education.
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States receive most of their intergovernmental revenue funds from ___ _______ __________.
States receive most of their intergovernmental revenue funds from ___ _______ __________.
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Which is a major revenue category for state governments? A.federal spending B.contributions to employment retirement funds C.sales tax receipts D.all of the above
Which is a major revenue category for state governments? A.federal spending B.contributions to employment retirement funds C.sales tax receipts D.all of the above
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What do state governments spend the most on? A.local governments B.the federal government C.welfare D.higher education
What do state governments spend the most on? A.local governments B.the federal government C.welfare D.higher education
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After intergovernmental revenue, the largest source of revenue for local governments is ________ ___.
After intergovernmental revenue, the largest source of revenue for local governments is ________ ___.
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Which is an example of a natural monopoly? A.a city water system B.an intergovernmental revenue payment C.a balanced budget amendment D.all of the above
Which is an example of a natural monopoly? A.a city water system B.an intergovernmental revenue payment C.a balanced budget amendment D.all of the above
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Study Notes
Taxation Concepts
- Incidence of a tax refers to the final burden or effect of that tax on individuals or entities.
- Tax loopholes are exceptions or oversights in tax laws that enable taxpayers to legally avoid paying certain taxes.
- The individual income tax is the largest tax imposed on wages, salaries, and personal income sources.
- The Internal Revenue Service (IRS) is the U.S. Treasury Department branch responsible for tax collection and enforcement.
- Sales tax is a state or city tax applied to products during the sale process, impacting consumer purchases.
Tax Characteristics
- An effective tax demonstrates equity, simplicity, and efficiency in its structure.
- The benefit principle posits that individuals should contribute to government services in proportion to their benefits received.
- Tax types can be categorized as proportional, progressive, or regressive based on their impact on different income levels.
- Progressive tax is opposite to regressive tax, meaning higher-income earners pay a larger percentage.
Types of Taxes
- Capital gains tax is levied on profits from the sale of assets held for more than a year.
- Excise tax is imposed on specific goods and services such as gasoline and tobacco products.
- Payroll tax refers to taxes taken directly from employees' wages to fund social insurance programs, including FICA.
Government Finance
- The national debt represents the total amount borrowed by the government to finance deficits.
- A balanced budget occurs when annual revenues equal expenditures, preventing excessive borrowing.
- Per capita measures statistics on a per-person basis, providing insight relative to population size.
- The private sector encompasses the part of the economy driven by private individuals and businesses, as opposed to government entities.
Social Programs and Funding
- Entitlements are government programs ensuring benefits based on established criteria for individuals in need, such as Social Security and Medicare.
- The primary revenue source for the federal government is taxes, which fund varying federal activities and programs.
- States receive major intergovernmental revenue funds from the federal government, which assists with local projects and needs.
Spending and Economic Principles
- National defense does not classify as mandatory federal spending like Social Security or Medicare.
- The crowding-out effect results from high-interest rates due to government borrowing, making private borrowing more expensive.
- Only select states are free from general sales tax, contradicting the notion that only a few states lack this tax.
- The primary focus of state spending often targets local governments, given their essential role in community services.
- Property tax serves as the largest local government revenue source after intergovernmental revenue.
- A natural monopoly, such as a city water system, arises when a single provider can supply a good or service more efficiently than multiple providers.
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Description
Test your knowledge on key taxation concepts from Chapter 14 with this comprehensive quiz review. Familiarize yourself with terms like 'incidence' and 'tax loopholes' and understand the nuances of individual income tax. Perfect for students preparing for major assessments in tax studies.
