Multiple Choice Questions
1. A tax rate that decreases as the tax base increases is an example of what kind of tax rate structure?
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
2. A tax rate that decreases as the tax base decreases is an example of what kind of tax rate structure?
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
3. Jake earned $15,000 and paid $1,500 of income tax; Jill earned $40,000 and paid $3,000 of income tax. The tax rate structure they are subject to is:
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
4. Margaret earned $15,000 and paid $1,500 of income tax; Mike earned $40,000 and paid $4,000 of income tax. The tax rate structure they are subject to is:
a. Progressive.
b. Proportional.
c. Regressive.
d. Recessive.
5. Which of the following is an example of a regressive tax?
a. Federal income tax.
b. State and local taxes levied on property.
c. Sales tax.
d. Social Security tax.
6. Which of the following is an example of a progressive tax?
a. Federal income tax.
b. State and local taxes levied on property.
c. Sales tax.
d. Social Security tax.
7. Jennifer and Paul have taxable income of $92,075 and the following tax liability:
$18,150 × 10% = …………………. $ 1,815.00
($73,800 − $18,150) × 15% = ……. 8,347.50
($92,075 − $73,800) × 25% = ……. 4,568.75
Total tax liability…………. $14,731.25
Their marginal tax rate is:
a. 10%.
b. 15%.
c. 16%
d. 25%.
8. Jennifer and Paul have taxable income of $92,075 and the following tax liability:
$18,150 × 10% = ………………….. $ 1,815.00
($73,800 − $18,150) × 15% = …….. 8,347.50
($92,075 − $73,800) × 25% = …….. 4,568.75
Total tax liability …………. $14,731.25
Their average tax rate is:
a. 10%.
b. 15%.
c. 16%.
d. 25%.