United States Government taxes vocabulary

What is a 'sin tax' designed to do?

• Encourage consumption of luxury goods

• Raise revenue and discourage consumption of undesirable products

• Provide tax relief to low-income families

• Support local businesses

Which of the following is a tax on wages and salaries deducted from paychecks to finance Social Security and Medicare?

• Payroll tax

• Estate tax

• Excise tax

• Sales tax

What is the purpose of a 'tax loophole'?

• To allow taxpayers to avoid paying certain taxes

• To ensure fair taxation

• To simplify the tax filing process

• To increase government revenue

Which tax is levied on the profits from the sale of an asset held for 12 months or longer?

• Gift tax

• Corporate income tax

• Capital gains tax

• Estate tax

What is a 'proportional tax' also known as?

• Progressive tax

• Flat tax

• Excise tax

• Regressive tax

Which tax is applied to the next dollar of taxable income?

• Proportional tax rate

• Marginal tax rate

• Average tax rate

• Regressive tax rate

What is the 'debt ceiling'?

• A cap on the interest rates for loans

• The maximum amount of debt an individual can have

• The total amount of taxes collected in a fiscal year

• A limit on the total amount of money the federal government can legally borrow

Which of the following describes 'mandatory spending'?

• Federal spending authorized by law that continues without the need for annual approvals

• Spending that requires annual approval by Congress

• Spending on defense and military

• Discretionary spending on social programs

What is the main characteristic of a 'progressive tax'?

• The percentage of income paid in tax decreases as income rises

• It is only applied to corporate profits

• The percentage of income paid in tax rises as the level of income rises

• The percentage of income paid in tax is the same regardless of income level

What is the 'fiscal year' for planning the federal budget?

• January through December

• April through March

• October through September

• July through June