Question 1

In the United States, the marginal tax rate for married couples:

Accepted Answer

The marginal tax rate, which is the rate at which the last dollar of income is taxed, typically exceeds the average tax rate (total tax paid divided by total income) for most income levels. This is because the U.S. tax system is progressive, meaning that as income increases, the rate of tax on additional income also increases.

Question 2

As income rises, the marginal tax rate for married couples:

Accepted Answer

The marginal tax rate for married couples typically increases in steps as income rises, reflecting the progressive nature of the tax system where higher income brackets are taxed at higher rates.

Question 3

The first payment of Social Security benefits began in:

Accepted Answer

The first monthly Social Security benefits were issued in January 1940.

Question 4

Which of the following is NOT one of the main sources of tax revenue for the federal government?

Accepted Answer

Sales tax is typically collected by state and local governments, not the federal government. Federal tax revenue primarily comes from individual income taxes, Social Security and Medicare taxes, and corporate income taxes.

Question 5

Income that is not subject to taxation is called:

Accepted Answer

Exempt income is income that is not subject to taxation. Marginal income refers to the additional income earned from producing one more unit of output. Average income is the total income divided by the number of individuals or households. Excluded income is not a commonly used term in taxation.

Question 6

Since 1960, marginal tax rates in the United States have decreased for individuals:

Accepted Answer

Since 1960, marginal tax rates in the United States have decreased for individuals at all income levels, although there have been fluctuations in how much they have decreased or increased over time.

Question 7

What are the three main sources of funds for the U.S. federal government?

Accepted Answer

The three main sources of funds for the U.S. federal government are individual income taxes, corporate income taxes, and Social Security and Medicare taxes. These sources are directly related to the collection of taxes from individuals and businesses, as well as payroll taxes for social insurance programs.

Question 8

The Social Security payment system began issuing Social Security checks:

Accepted Answer

The Social Security payment system began issuing Social Security checks in 1940 through the Social Security Act, which was passed in 1935 during the Great Depression.

Question 9

Since the mid-1950s, federal government spending has been about _____ of GDP.

Accepted Answer

Since the mid-1950s, federal government spending has averaged around 20% of GDP. While this percentage has fluctuated over time, it has remained relatively consistent over the decades.

Question 10

Which of the following is the largest source of tax revenue for the U.S. federal government?

Accepted Answer

The individual income tax is the largest source of tax revenue for the U.S. federal government, accounting for approximately 50% of all tax revenue collected. Corporate income tax and estate taxes make up a much smaller portion of total tax revenue, and Social Security and Medicare taxes are earmarked for specific programs and not considered general tax revenue.

Question 11

As of 2013, the level of per capita federal taxes collected in the United States was about:

Accepted Answer

As of 2013, the level of per capita federal taxes collected in the United States was about $9,000. This figure is derived by dividing the total federal tax revenue by the total population of the United States.

Question 12

Which of the following sources of tax revenues make up more than 90% of all government revenue?

Accepted Answer

According to the National Taxpayer Union Foundation, individual income tax, corporate income tax, and Social Security and Medicare taxes make up more than 90% of all government revenue. As per this, options A, B, and D are not correct.

Question 13

The second-largest source of revenue for the U.S. federal government is:

Accepted Answer

Social Security and Medicare taxes, also known as payroll taxes, are the second-largest source of revenue for the U.S. federal government, following the individual income tax. These taxes fund the Social Security and Medicare programs.

Question 14

As income rises, the average tax rate for married couples:

Accepted Answer

The average tax rate for married couples typically increases smoothly as income rises, reflecting a progressive tax system where higher income levels are taxed at higher rates.

Question 15

In 1940, Ida May Fuller received the first Social Security check after contributing only $24.75 in Social Security taxes before she retired and lived to be 100 years old. Her case is an example of how:

Accepted Answer

Ida May Fuller's case illustrates how early recipients of Social Security, like herself, received significantly more in benefits compared to what they contributed, a contrast to the expected experience of newer entrants to the program who will likely contribute more over their lifetimes relative to what they will receive in benefits.

Question 16

In 2013, the U.S. federal government received about _____ in tax revenue.

Accepted Answer

The U.S. federal government received approximately $2.8 trillion in tax revenue in 2013, according to the Internal Revenue Service (IRS). This includes revenue from individual income tax, payroll tax, corporate tax, and other sources. A is incorrect because the amount is much too low, while D is incorrect because it is astronomically high and unrealistic. B is closer to the actual amount, but it still underestimates the total tax revenue by a significant amount.

Question 17

Which of the following accounts for the largest source of tax receipts for the U.S. federal government?

Accepted Answer

The individual income tax accounts for the largest source of tax receipts for the U.S. federal government, generating approximately 50% of total tax revenue. This is followed by payroll taxes, such as Social Security tax, which accounts for approximately 35% of tax revenue. Excise tax and corporate income tax account for a much smaller share of tax revenue.

Question 18

Since the mid-1950s, federal government taxation has been about _____ of GDP.

Accepted Answer

According to data from the Office of Management and Budget, federal government taxation has averaged about 18% of GDP since the mid-1950s. This includes taxes on income, payroll, corporate profits, and other sources of revenue. Option A and B are too low compared to historical averages, and Option D is too high.

Question 19

What are the three largest sources of tax revenue for the U.S. federal government?

Accepted Answer

According to the IRS, the three largest sources of tax revenue for the U.S. federal government are the individual income tax, Social Security/Medicare taxes, and corporate income tax. Therefore, choice D is the correct answer.

Question 20

The largest source of revenue for the U.S. federal government is:

Accepted Answer

The individual income tax provides the largest source of revenue for the U.S. federal government, accounting for approximately 50% of all federal revenue.

Quiz 17: The Federal Budget: Taxes and Spending