Taxes: Checkpoint 2

Covers sales tax and VAT, what taxes fund, and the debate over tax fairness.

Five questions on consumption taxes, what taxation actually funds, and the fairness debate behind tax structures.

Question 1 of 5 The main structural difference between sales tax and VAT is that:

VAT only applies to imports Sales tax is collected once at the final sale; VAT is collected in stages across the supply chain Sales tax is always higher than VAT VAT does not apply to services

Question 2 of 5 'Tax incidence' refers to:

The tax rate written into law Who actually bears the economic cost of a tax, which may differ from who legally pays it The number of tax brackets in a system A penalty for late filing

Question 3 of 5 A public good is defined by being:

Expensive to produce Non-excludable and non-rivalrous Only available to taxpayers Always provided by private companies

Question 4 of 5 The free-rider problem describes a situation where:

Everyone voluntarily overpays for a public good Individuals have an incentive to let others pay for a public good while still benefiting from it A tax is collected twice on the same purchase Public goods are always overfunded

Question 5 of 5 A regressive tax is one that:

Takes a larger percentage of income from higher earners Takes a larger percentage of income from lower earners, even at a flat stated rate Only applies to corporations Decreases over time automatically

← Back to Tax Fairness: Progressive, Regressive, and the Ongoing Debate → All modules

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