Economics, Principles and Practices – Unit 3, Chapter 9, Sections 1 – 3; pgs 228-255; 2 per page
Vocabulary
sin tax
incidence of a tax
sales tax
tax return
ability-to-pay principle of taxation
progressive tax
marginal tax rate
evolved
Internal Revenue Service
FICA
payroll tax
estate tax
gift tax
intergovernmental revenue property tax
implemented
considerably
accelerated depreciation
investment tax credit
flat tax
value-added tax
(42 total)
tax loophole
individual income tax
benefit principle of taxation proportional tax
average tax rate
Medicare
regressive tax
validity
payroll withholding system indexing
corporate income tax
excise tax
customs duty
user fee
tax assessor
natural monopoly
payroll withholding statement
alternative minimum tax
capital gains
concept
controversial
Comprehension Questions
1. How does the government get its money?
2. What must taxes be in order to be effective?
3. What does it mean to say that taxes must be equitable?
4. What two principles are taxes in the United States based on?
5. Give an example that illustrates the benefit principle of taxation.
6. Give an example of the ability-to-pay principle of taxation.
7. What are the three general types of taxes that exist in the United States today?
8. Why was the first federal income tax enacted in 1861?
9. What are the main sources of government revenue?
10. Where do States get their revenues from?
11. What are the main revenue sources for local governments?
12. What was one consequence of tax reform?
13. Where can you find out about the income taxes you pay?
14. Use the tax table shown in Figure 9.7 on page 249. How much in taxes would an individual with $40,000 of taxable
income pay?
15. What fact virtually guarantees that there will be future attempts to simplify the tax code?
Written Answer
Write a paragraph with a minimum of six sentences to explain what you have learned in this lesson. Be sure to
include a topic sentence, four detail sentences, and a concluding sentence.