8 an exists if federal government spending is less

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Unformatted text preview: ent with the principle of ______ taxation. 7. The ______ tax is applied to corporate profits. 8. A(n) ______ exists if federal government spending is less than federal government tax revenues. 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 eliminated? 5. Explain how a budget deficit can cause a future generation to pay for what a current generation buys. 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 kingdom”? 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 taxation. 12. What is a flat tax? Doing the Math Do the calculations necessary to solve the following problems. 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 and Tables 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 each bar. 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 each bar. EXHIBIT 14-9 60% Percentage of total tax revenues 14 (364-389) EMC Chap 14 50% 44% 38% 40% 30% 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 answer. 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) 30% Percentage of total spending Use your thinking skills and the i...
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This document was uploaded on 01/16/2014.

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