Funding and Budgeting

Question 1

Taxes

Answer 1

to raise revenue, government agencies frequently assess taxes. The primary source of taxation varies from state to state. Taxes are used to generate revenue to finance government and redistribute income.

Question 2

Three Types of Taxes

Answer 2

Progressive, proportional, and regressive

Question 3

Progressive Tax

Answer 3

The tax rate increases as income rises. For example, the federal income tax system taxes those with high incomes at a higher tax rate than those with low incomes

Question 4

Proportional Tax

Answer 4

The tax rate is the same regardless of income. For example, a property tax rate is the same regardless of the price of your home. A person who owns a $50,000 home pays the same proportion as a person who owns a $250,000 home.

Question 5

Regressive Tax

Answer 5

The tax rate decreases as income rises

Question 6

When considering the implementation of a tax there are several criteria that should be considered:

Answer 6

Fairness: a tax should reflect the ability to pay of those who bear its burden. Thos who are poor, for instance, should not have to pay a lot in taxes

Certainty: a tax should be fairly applied (i.e., I know that every time I go to purchase a gallon of milk, that i will be taxed at the same rate)

Convenience: A tax should be convenient to pay. For example, vehicle registration taxes are mailed to vehicle owners homes

Efficiency: A tax should allow collection and enforcement to be a straightforward process

Productivity: a tax should provide a stable source of revenue

Neutrality: a tax should not change the way a government would normally use its resources.