GED Social Studies : Taxes and Tariffs

Study concepts, example questions & explanations for GED Social Studies

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Example Questions

Example Question #1 : Taxes And Tariffs

In a progressive tax system __________

Possible Answers:

the government cannot levy income taxes.

the greater an individual’s income, the higher proportion of tax they pay.

everyone is taxed at the same rate regardless of income.

the government cannot tax anyone and must collect revenue by other means.

the greater an individual’s income, the lower proportion of tax they pay.

Correct answer:

the greater an individual’s income, the higher proportion of tax they pay.

Explanation:

In a progressive tax system, the wealthier someone is the higher proportion of tax they must pay. This is the tax system that currently exists in most western countries, including the United States. On the opposite side of the spectrum is a regressive tax system, where the wealthier members of society pay taxes at a lower proportion than everyone else.

Example Question #2 : Taxes And Tariffs

What is the term for a tax on the production or sale of a specific good within a given territory? 

Possible Answers:

Excise tax

Income tax

Property tax

Value-added tax

Sin tax

Correct answer:

Excise tax

Explanation:

Excise taxes are taxes that are levied on a specific good. They differ from related taxes like sales taxes, which are levied at a set rate across all goods sold. Within the United States, gasoline taxes are a prime example of excise taxes. Every gallon of gasoline sold in the United States has 18.4 cents in tax added to its price that ends up paid to the federal government. Many states also levy their own gasoline taxes as well. Federal gasoline tax revenue is applied to the mainentance of the US highway system. Excise taxes are popular as policies that are designed to extract revenue for the upkeep of public systems from those that specifically benefit from said system. Those that pay gasoline taxes are, for example, very likely to benefit from driving their gasoline burning cars on publicly maintained highways. 

Example Question #1 : Taxes And Tariffs

Tax that is paid to the government on the sale of land, stocks, and other such assets is called __________.

Possible Answers:

Progressive Income Tax

Capital Gains Tax

National Reserve Tax

Inheritance Tax

Wall Street Tax

Correct answer:

Capital Gains Tax

Explanation:

Capital Gains Tax is a tax paid to the Federal government on the sale of things such as land, stocks, bonds, property. It is a tax on the profit, or the amount of money you made (the gain), in the sale of capital.

Example Question #2 : Taxes And Tariffs

A tax on goods produced or sold within a country is called a(n) __________.

Possible Answers:

excise tax

inheritance tax

tariff

property tax

income tax

Correct answer:

excise tax

Explanation:

An excise tax is a tax issued on the production or purchase of goods sold within a country. Often, excise taxes are issued by the government to try and prevent certain dangerous or unhealthy forms of behavior, so there are excise taxes on cigarettes for example.

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