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1. | The 1991 luxury tax taxed expensive goods. The resulting higher prices drove customers away, and unemployment soared in some of these industries because the demand for luxury goods was __________ .
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| A) unit elastic
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| B) inelastic
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| C) elastic
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| D) cross elastic
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2. | The tax on people's earnings, the __________ tax, is a prime example of a complex tax.
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| A) corporate
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| B) usage
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| C) sales
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| D) individual income
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3. | The gasoline tax is based on the __________ principle of taxation, the principle that those who benefit from government goods and services should pay in proportion to the amount of benefits received.
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| A) graduated
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| B) wage
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| C) ability-to-pay
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| D) benefit
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4. | The individual income tax is based on the __________ principle of taxation.
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| A) wage
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| B) ability-to-pay
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| C) benefit
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| D) proportional
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5. | According to individual tax tables single individuals paid a flat 15 percent on all income up to some level. After that, the marginal tax rate jumps to 28 percent, 31 percent, 36 percent, and 39.6 percent, depending on the amount of taxable income. This individual income tax is an example of a __________ tax.
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| A) progressive
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| B) regressive
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| C) proportional
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| D) flat
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6. | The __________ is taxed separately from individuals because it is recognized as a separate legal entity.
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| A) proprietorship
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| B) partnership
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| C) entrepreneurship
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| D) corporation
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7. | A(n) __________ tax is the tax the government levies on the transfer of property when a person dies. These taxes can range from 18 to 55 percent of the value of the estate.
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| A) gift
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| B) sales
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| C) estate
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| D) individual
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8. | The category called ___________ revenue are funds collected by one level of government that are distributed to another level of government for expenditures.
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| A) intergovernmental
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| B) state
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| C) local
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| D) government level
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9. | The summary statement attached to a paycheck that summarizes income, tax withholdings, and other deductions is the __________ statement.
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| A) individual withdrawal
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| B) government withholding
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| C) tax withdrawal
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| D) payroll withholding
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10. | The second largest source of revenue for state governments is the __________ .
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| A) personal income tax
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| B) sales tax
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| C) corporate income tax
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| D) property tax
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11. | The Omnibus Budget Reconciliation Act of 1993 removed the $135,000 cap on medicare taxes to make the tax _________ rather than ________.
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| A) regressive, proportional
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| B) progressive, regressive
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| C) regressive, proportional
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| D) proportional, regressive
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12. | The concept of a flat tax is a(n) ____________ tax on individual income after a specified threshold has been reached. It was promoted as a way to both simplify taxes and stimulate economic growth.
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| A) excise
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| B) regressive
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| C) progressive
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| D) proportional
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13. | The main disadvantage of the VAT is that it ____________.
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| A) is invisible to consumers
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| B) falls on producers
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| C) it too progressive
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| D) is based on the benefit principle of taxation
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14. | The current individual tax code is now ____________.
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| A) invisible to consumers
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| B) more complicated than at any time in our history
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| C) "flatter" than it was in 1992
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| D) based on the benefit principle of taxation
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