True/False
Indicate whether the statement is true or
false.
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1.
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Individuals and businesses pay a variety of direct and indirect taxes for the
purpose of raising revenue.
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2.
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A tax is a compulsory contribution of money people make to the
government.
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3.
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When you buy a postage stamp, you are paying a tax.
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4.
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The main purpose of taxation is to raise revenue to pay government
expenses.
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5.
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When you buy gasoline, you are paying a direct tax.
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6.
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Business corporations do not have to pay income taxes.
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7.
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Income tax is a type of graduated tax.
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8.
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Every family must pay some federal income tax.
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9.
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All corporations are subject to income taxes.
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10.
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Most Americans resent paying taxes and want a major tax revolution.
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11.
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A family with six children pays no income tax.
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12.
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Each taxpayer is allowed a certain level of tax-free income.
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13.
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Most state and local governments use a flat tax.
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14.
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An individual’s taxable income is provided on Form W-2 Wage and Tax
Statement.
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15.
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Most young workers file income tax Form 1040 or 1040A
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Matching
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Match each item to the correct statement listed below. a. | Income tax | b. | Payroll tax | c. | Sales
tax | d. | Excise tax | e. | Estate tax | f. | Inheritance
tax | g. | Gift tax | h. | Revenue | i. | Deductions | j. | Exemptions |
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16.
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Tax paid on items purchased
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17.
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Paid on salary, wages, and tips as well as savings and investments
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18.
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Support Social Security programs
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19.
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Paid on such items as tires and gasoline.
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20.
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Taken out of each person’s share of the will.
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21.
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Subtract nontaxable items such as mortgage interest or property taxes
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22.
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Paid by the person giving a large sum of money to another
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23.
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A set amount for yourself and each dependent
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24.
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Assessed on the value of the deceased person’s wealth and property before
it passes on the heirs of the estate
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25.
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Money to pay the cost of government
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Short Answer
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26.
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Explain the difference between a flat tax and a graduated
tax.
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27.
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The income tax due is determined by subtracting from total income adjustments,
exemptions, and deductions. Provide one example of each of these terms.
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