Topic 8

When preparing federal income taxes, taxpayers may use a tax table such as the one shown here to find how much income tax they owe. Use this table to determine the tax owed on a taxable income of $10,271 by an unmarried person who is not head of a household.

$1,095

The Congress shall have Power 1. To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; —Article 1, Section 8, Clause 1 of the Constitution of the United States This passage from the Constitution supports which of the following statements?

A national tax cannot be levied at different rates in different states.

What does this photograph suggest about the challenges facing lawmakers who may want to address concerns about funding for major entitlements?

Attempts to change the program often meet with strong opposition

What does this graph imply about how a $.50 tax increase is ultimately paid in a market where demand for the good taxed is inelastic?

Consumers pay $.40 and suppliers absorb $.10 of the tax increase.

Suppose Congress decides to cut total federal spending by 10 percent in its annual budget legislation. Which is the largest category on this graph that they would be able to reduce?

Defense

Why does debate over the budget in Congress often focus on spending for defense?

Defense is the largest category of discretionary spending.

Look at this circle graph, and consider who pays the taxes that make up each section of it. Which statement BEST summarizes the information shown here?

Individual taxpayers are responsible for the large majority of federal receipts.

Which of the following BEST summarizes what this cartoon implies about the federal government?

It spends huge amounts of taxpayer money but always seems to need more

Refer to the table above to answer this question: Which of the following illustrates the progressive structure of the federal income tax?

Taxable income of $180,000 is taxed at a higher rate than a taxable income of $80,000

Which of the following will MOST LIKELY happen soon after a natural disaster such as the one shown here?

The federal government will provide relief to victims and help fund the recovery.

Which of the following statements is supported by this graph?

The higher the income, the lower the share of income paid in sales and excise taxes

What principle of equity is illustrated by this diagram?

The share of income paid in taxes should vary based on ability to pay.

Lawmakers believe that the proposed tax will improve the public health by discouraging consumption of a product that has been linked to a variety of health problems. This passage might have come from a news story that is discussing which of the following?

an excise tax

A city that wants to raise tax revenue from tourists would likely do which of the following?

impose a tax on meals served at restaurants

Which government tax program would most likely support the installation on the roof in the photo?

income tax credits

If the United States completely eliminated all tariffs, what would the result MOST LIKELY be?

increased free trade

The public good illustrated here is typically paid for by

local property taxes.

Putting both Social Security and Medicare in an iron-clad lock box where the politicians can't touch them, to me, that kind of common sense is a family value. —Vice President Al Gore, Democratic National Convention, August 2000 This quote is explained by the fact that the spending on these programs is

mandatory.

Which type of tax is levied at the same percentage for people at all income levels?

proportional

States recognize the economic importance of having a skilled workforce. This is one reason states invest taxpayer dollars in

public education.

This illustration and the event it commemorates emphasize colonial Americans'

sensitivity about government's power to tax.

In works of historical fiction, and perhaps in real life too, monarchs and rich landowners would gesture toward their vast landholdings and say to their children, "One day, all this will be yours." But in the United States today, they would have to say, "One day, a percentage of this will be yours." This passage could be referring to the impact of which of the following?

the estate tax

The purchase of paper and office supplies for a state government office would be funded out of

the state's operating budget.

Which of the following features of this diagram would be most worrisome to those planning for the future of entitlement programs such as Social Security and Medicare?

the tower-like shape of the pyramid on the right

Federal income tax is collected on a "pay-as-you-earn" system. This means that individuals usually pay most of their income tax throughout the calendar year as they earn income.

withholding