#1
Which of the following is a progressive tax system?
Income tax
ExplanationTax rate increases as income rises.
#2
What does VAT stand for?
Value-added Tax
ExplanationTax on value added at each stage of production.
#3
What is a 'sin tax' primarily imposed on?
Unhealthy or harmful products
ExplanationTax to discourage consumption of unhealthy goods.
#4
What is the term for a tax on the transfer of property after a person's death?
Estate tax
ExplanationTax on the transfer of wealth upon death.
#5
Which of the following is an example of an indirect tax?
Sales tax
ExplanationTax levied on consumption rather than income.
#6
Which of the following is NOT typically considered taxable income?
Child support payments
ExplanationPayments to support children are usually not taxed.
#7
Which of the following taxes is typically paid by the employer rather than the employee?
Social Security tax
ExplanationTax contribution for social insurance programs.
#8
What is the tax rate on long-term capital gains for most individuals in the United States?
20%
ExplanationTax rate on profits from selling assets held for over a year.
#9
In a proportional tax system, what happens to the tax rate as income increases?
The tax rate remains the same.
ExplanationTax rate is fixed regardless of income level.
#10
What is the taxation principle that states that taxes should be based on an individual's ability to pay?
Ability-to-pay principle
ExplanationTaxation should consider individual financial capacity.
#11
What is the taxation principle that suggests that those who benefit from public services should pay for them in proportion to the benefits received?
Benefit principle
ExplanationTax payment should align with benefits from public services.
#12
What is the taxation principle that states that taxes should be levied in a way that does not distort economic behavior?
Economic efficiency principle
ExplanationTaxes should not alter economic decision-making.
#13
Which of the following is NOT a tax deduction in the United States?
Credit card interest
ExplanationInterest payments on credit cards are not deductible.
#14
Which of the following statements about tax brackets is true?
Tax brackets apply to each dollar of income within the specified range.
ExplanationDifferent tax rates apply to different income levels.