Chapter 7

A person earning $200,000 a year pays _____ in payroll taxes. Assume a Social Security Limit of $118,500.

$10,247

Above is a chart that shows the tax rates for single and married people. How much would a single person pay in taxes if he made $85,000?

17,520

The economic policy of the U.S. government could have been described as laissez-faire until about

1933

The Pataki family pays $12,000 in federal income tax out. Their income is 50,000. Their average (effective ) tax rate is

24%

If your taxable income rises from $75,000 to $147,000, and the taxes you pay rise from $15,000 to $33,000, your marginal tax rate is

25%

Assume that the Social Security Income cap is $118,500. How much will a person pay in payroll taxes if he earns in wages $125,000?

9,159

Which one of these is NOT an economic function of the federal government or Federal Reserve?

Each is an economic function of the federal government.

which statement is true?

State and local governments are expected to provide more and more services while their tax bases are limited.

Statement I: A progressive tax places a heavier burden on the rich than on the poor. Statement II: The Social Security tax and Medicare tax are both regressive.

Statement I is true and statement II is false.

Statement I: Social Security benefits are financed entirely by taxes that workers pay. Statement II: Social Security benefits are a government transfer payment.

Statement II is true and statement I is false.

The social security tax is NOMINALLY

direct and regressive

Transfer payments to individuals amount to a little less than _____ of total government spending.

half

An individual taxpayer with a taxable income of $160,000

has a higher marginal than average tax rate.

If Mr. Perot faces a 90 percent marginal tax rate,

he has a strong incentive to work less.

The largest source of federal tax revenue comes from

individual income taxes

in 2008, a person earning 300,000 would pay Social Security tax on

less than half of their income

The property tax is the most important source of ______ government revenue.

local

A tax on _____ would be the least impactful to all consumers.

luxury cars

The Jones family has an average tax rate of 15 percent. Its marginal tax rate is

more than 15%

Most poor families pay ____ federal personal income tax

no

The fastest growing source of federal tax revenue is the _________ tax.

payroll

The most important source of local tax revenue is the _______ tax

property

Excise taxes are Nominally

proportional

Mr. Bush earns $1,000,000 and pays $100,000 in taxes. Mr. Gore earns $150,000 and pays $17,500 in taxes. The tax they pay would be considered

regressive

The most important source of state tax revenue is the ________ tax

sales

The sales tax is the most important source of _________ government revenue

state

The key agency in the preparation of the president's budget is

the office of Management and Budget (OMB).

The federal budget is prepared and passed by

the president and congress

A salary worker making $1,000,000 pays

the same in Social Security tax as a person making a salary of 120,000

Which of the following is a transfer payment?

veterans benefits