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Unformatted text preview: ent with the principle of
7. The ______ tax is applied to corporate profits.
8. A(n) ______ exists if federal government
spending is less than federal government tax
9. A tax rate that rises as income rises is a(n)
______ tax. Understanding the Main Ideas
Write answers to the following questions to review
the main ideas in this chapter.
1. What are the three major types of federal taxes?
2. Which level of government—federal, state, or
local—typically collects sales taxes?
3. Name two factors that have caused more
and more people to pay the alternative minimum tax.
4. In what ways can a budget deficit be reduced or
5. Explain how a budget deficit can cause a future
generation to pay for what a current generation
6. What did Adam Smith mean when he said,
“What is prudence in the conduct of every private family, can scarce be folly in that of a great
7. What role does the Congressional Budget Office
(CBO) play in the budget process? 11/18/05 10:59 AM Page 387 8. What is the difference between a calendar year
and a fiscal year?
9. What three federal taxes raise more than 90 percent of all federal tax revenues?
10. Smith paid $40,000 in federal income taxes, and
Abuel paid $20,000. Is the income tax progressive, proportional, or regressive, or is it impossible to tell? Explain your answer.
11. Explain the benefits-received principle of
12. What is a flat tax? Doing the Math
Do the calculations necessary to solve the following
1. According to Exhibit 14-1, what percentage of
total taxes is the personal income tax projected
to account for in 2009?
2. According to Exhibit 14-5, approximately what
percentage of a year did the representative taxpayer work to pay his or her taxes in 1980?
3. According to Exhibit 14-7, what percentage
increase in government spending is expected
between 2008 and 2009? taxes, sales taxes, or the national debt. Identify
the major ideas of the article. Working with Graphs
1. Look at Exhibit 14-9(a) below. Each bar represents a certain type of federal income tax in
2005. Identify the kind of tax that goes with
2. Look at Exhibit 14-9(b). Each bar (A, B, and C)
represents a certain federal spending program
in 2005. Identify the program that goes with
EXHIBIT 14-9 60%
Percentage of total
tax revenues 14 (364-389) EMC Chap 14 50% 44%
20% 10.3% 10%
0 A Solving Economic Problems 1. Application. Suppose a local government were
to lower the property tax from 1.25 percent of
the assessed value of property to, say, 0.75 percent. How might this affect the price of property? Explain your answer.
2. Cause and Effect. Do you think a proportional tax or a progressive tax is more likely to
lead to unequal after-tax pay? Explain your
3. Writing. Write a one-page paper outlining your
arguments either for or against the benefitsreceived principle of taxation.
4. Economics in the Media. Find an article in
the local newspaper that addresses the current
state of the federal budget, personal income C (a)
Percentage of total
spending Use your thinking skills and the i...
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This document was uploaded on 01/16/2014.
- Winter '14