If south dakota’s governor reports a budget surplus in 2011. that state government likely:

1.If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes?

income tax is a proportional tax
income tax is a progressive tax
payroll tax is a regressive tax
payroll tax is a progressive tax
2.If the state of Washington’s government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a:
budget deficit.
budget surplus.
decrease in payroll tax.
decrease in proportional taxes.
3.If South Dakota’s governor reports a budget surplus in 2011, that state government likely:
received more in taxes than it spent in that year.
increased the proportional tax level.
equalized spending and taxes in that year.
increased the corporate income tax rate.
4.If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
optional.
progressive.
proportional.
regressive.
5.In 2010, Microsoft will pay corporate income tax to the federal government based on the company’s __________________.
proportional tax rate
corporate profits
optional tax rate
excise profits

Answer

1. The correct answer is: b. income tax is a progressive tax. Progressive income tax implies that income tax owed increases with increase in income. Only if income tax is a progressive tax, share of income tax in total revenue will be greater if over half the households in the country pay more in payroll taxes than in income taxes. 2. The correct answer is: b. budget surplus. A budget is balanced when total revenue = total expenditure. There is budget surplus when total revenue > total expenditure. There is budget deficit when total revenue < total expenditure. Since $75 billion > $74.8 billion, there is budget surplus. 3. The correct answer is: a. received more in taxes than it spent in that year. A budget surplus occurs when tax receipts exceed government spending. 4. The correct answer is: d. regressive. Tax rate for Paul = $10,000/$100,000 * 100 = 10% Tax rate for Peter = $15,000/$200,000 * 100 = 7.5% Therefore, the tax paid has decreased with increase in income from $100,000 to $200,000. This is a regressive tax.

5. The correct answer is: b. corporate profits

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