Do You Know Why Your Taxes Are So High?

7 Questions

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Do You Know Why Your Taxes Are So High?

Death, taxes, and confusion over taxes are the certainties in life. Take this quiz to learn more about how your tax money is collected and spent by the federal government.


Questions and Answers
  • 1. 
    Tax expenditures, in the form of permissible deductions, credits, and exclusions, must be made up for by higher tax rates on income not similarly favored.  Tax expenditures in this sense are much like direct appropriations, but they receive far less public and Congressional scrutiny.  One of the most popular tax expenditures is the home mortgage deduction.  Its aggregate effects and its wealth transfer effects, though, are dubiously beneficial as a matter of public policy.  How much does this deduction cost the tax base every year?
    • A. 

      About $750 million

    • B. 

      About $5 billion

    • C. 

      About $50 billion

    • D. 

      About $70 billion

  • 2. 
    Not every country allows tax deductions for home mortgage interest. Which of these countries has no such deduction?
    • A. 

      The United Kingdom only

    • B. 

      Australia only

    • C. 

      Canada only

    • D. 

      All of the countries specified here

  • 3. 
    The provision for the deduction of corporate interest is even more costly to taxpayers than the home mortgage deduction, with a revenue cost of approximately $120 billion every year.  It favors businesses financing operations with debt rather than equity and corporate takeovers.  This increases overall leverage in the economy, which may threaten its stability in times of financial stress.  In which of the last fifteen years was the ratio of debt to equity greatest for American corporations as a whole?
    • A. 

      2006

    • B. 

      2007

    • C. 

      2009

    • D. 

      2015

  • 4. 
    Some taxes are perceived to be off the table of cuts no matter what party is in office due to the importance or popularity of the programs they are spent on.  Of all the money spent by the federal government, what percentage goes to programs for the elderly or in support of national defense and diplomacy?
    • A. 

      Under 10%

    • B. 

      30%

    • C. 

      Over 65%

    • D. 

      20%

  • 5. 
    At what income level does a taxpayer reach the maximum annual obligation to Social Security?
    • A. 

      $118,500

    • B. 

      $300,340

    • C. 

      $570,750

    • D. 

      $1,000,000

  • 6. 
    • A. 

      Tobacco growing

    • B. 

      Life insurance

    • C. 

      Oil production

    • D. 

      All of the industries named here

  • 7. 
    Every once in a while Congress wakes up and repeals an unnecessary or counterproductive tax expenditure.   Which of the following interest deductions has already been repealed by Congress?
    • A. 

      The deduction for credit card interest

    • B. 

      The deduction for the first $2500 of student loan interest

    • C. 

      The deduction for interest on debt used in hostile corporate takeovers

    • D. 

      None have been repealed